Non-Domiciled while maintaining home in UK

It is possible to be non-domiciled while maintaining home in UK. For example, a non-domiciled individual resides in the UK but has a permanent home (‘domicile’) outside the UK. The tax treatment for non-domiciled individuals differs depending on their residence status, the source of their income, and their choice of taxation basis.

Scenario 1: A person migrating to the UK. Suppose an individual from the US moves to the UK and intends to stay there permanently. In this case, they may become UK tax residents but will likely remain non-domiciled if they maintain strong connections with their home country. As a result, they can maintain a home in the UK and may choose between the arising or remittance bases for taxation purposes.

Under the arising basis, the individual will be taxed on their worldwide income and gains, regardless of whether they bring the money into the UK. Under the remittance basis, they will be taxed on their UK-sourced income and gains and any foreign income or gains brought into the UK (remitted). The remittance basis may involve additional charges for long-term UK residents.

Scenario 2: A person coming to the UK for temporary work may also maintain a home in the UK and be considered non-domiciled. If they are in the UK for less than 183 days in a tax year, they may be classified as a non-resident, and their UK tax obligations will be limited to UK-sourced income. However, if they are in the UK for 183 days or more, they will become tax residents and can choose between the arising and remittance basis for their non-UK income, as described in Scenario 1.

Scenario 3: Person migrating from the UK to another country If a UK-domiciled individual moves to another country, they may become non-domiciled in the UK depending on their intentions and connections with the UK. If they maintain a home in the UK, they must consider their tax obligations carefully. If they become non-residents in the UK, they will generally only be taxed on their UK-sourced income. However, if they remain tax residents in the UK, they will continue to be taxed on their worldwide income and gains.

In conclusion, non-domiciled individuals in the UK have different tax compliance obligations depending on their residence status, the source of their income, and their choice of taxation basis. Maintaining a home in the UK is possible for non-domiciled individuals, but it is essential to understand the tax implications associated with their specific circumstances and the double tax treaty. You can call us to discuss your personal circumstances with our specialist tax advisors.