Taxation | BHP Financial Management Ltd

Taxation - Residence and Domicile

Your liability to UK tax depends on your residence, ordinary residence and domicile.

Normally people who are born and bred in the UK of British parents, and who are permanently living here, are UK resident, ordinarily resident and domiciled, and thus need not concern themselves with the complexities of this area.

But if your situation is not so simple, then note that the HM Revenue and Customs's own basic guide is a 50-page printout. So what follows is the most elementary of overviews. If you think any of it might be important for you, contact us.

Residence - where you live. You will be deemed UK resident if you are in the UK for 183 days in any one tax year. There are no exceptions to this rule.

Ordinary residence - ordinary residence differs from 'residence'. The word ordinary indicates that your residence in the UK is typical for you and not casual. Ordinary residence should not be confused with your domicile - see below. If you have always lived in the UK then you are an ordinary resident here.

Domicile - in law, domicile is the status or attribution of being a permanent resident in a particular jurisdiction. Domicile is a matter of general law, not of tax law. It is only possible to have one domicile at a time and this is normally (but not always) where you have your permanent home.

The UK has three territories for domicile: England and Wales; Scotland; and Northern Ireland. There are three types of domicile:

Domicile of origin
Domicile of choice
Domicile of dependence

Broadly speaking, you are domiciled in the country where you have your permanent home. Domicile is distinct from nationality or residence. You can only have one domicile at any given time.

Tax aspects - the tax issues can be complex, with income tax, capital gains tax and inheritance tax all being affected in different ways.

If your circumstances are anything other than the normal born in the UK and living here full time, you should seek advice.