Residency & Domicile Flashcards
What is the difference between residency and domicile?
Residency is a short-term status based on your physical presence to determine your tax status
Domicile looks at where you consider your permanent home and has a more long term focus
How is an individuals residence determined?
The statutory residence test (SRT)
What are the three parts of the statutory residence test?
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1) Automatic Overseas Test
2) Automatic Residence Test
3) Sufficient Ties Test
Conducted strictly in this order
What does residence and domicile effect?
1) Income Tax
2) CGT Liabilities
What are the 3 automatic overseas tests?
1) Resident in 1 of last 3 tax years - present fewer than 16 days
2) Non resident in previous 3 & spent less than 46 days in uk
3) Person works abroad (35hrs a week and not in uk >91 days)
What are the three automatic UK tests?
1) >183 days in UK
2) has a home in the UK
3) Full time work in UK for 365 days
What is the process if you do not meet any of the automatic UK or overseas tests?
Sufficient ties test
Give 4 examples of “ties”
in terms of sufficient ties test
1) Family Tie
2) Accomodation Tie
3) Work Tie
4) 90 Day tie
What is a family tie?
If your partner, or child stay in the UK for the year
What is the accomodation tie?
Have a property to live in UK for >91 days and spend at least 1 day in it
What is a work tie?
1) works for >3hrs per day for at least 40 days
What is the 90 day tie?
If someone spends more than 90 days in a tax year in uk
What is a country tie?
Spends more in UK than any other country
this only applies to leavers
What is domicile?
The country which is your permanent home
it is not possible to have more than one domicile
What are the three types of domicile?
1) Domicile of Origin
2) Domicile of Choice
3) Domicile of Dependency
What is domicile of origin?
The domicile acquired at birth. Take your fathers current domicile (or mothers if father is dead at birth)
What is domicile of choice?
An individual can acquire a domicile of choice by moving to a new place with the intention of making it their permanent home
must be legally capable of changing domicile (e.g. of age and sound mind)
What is split year treatment?
If during a year, an individual leaves the UK to live or work abroad, or comes from abroad to live or work in the UK, they may be eligible to have their tax year split into two parts
- UK Part
- Overseas part
What is the remittance basis?
Instead of “arising” basis tax - tax is only paid on income that is “remitted” into the UK
Who can use the remittance basis?
non-domiciled individuals
who are resident for tax purposes
When can the remittance basis be claimed without claim?
If unremitted gains are less than £2,000
When is remittance basis free with claim?
Resident for less than 7 of 9 previous tax years
If someone is resident 7 of 9 tax years what is the charge for claiming the remitance basis?
£30,000
If someone is resident 12 of 14 tax years what is the charge for claiming the remitance basis?
£60,000
If you claim the remitance basis, what do you forfiet?
1) Annual allowance for income tax
2) CGT exempt amount
