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Impact of residence and domicile

HMRC’s online guidance note for residence, domicile and the remittance basis: RDR1 is intended for UK residents and non-residents and covers the residence, domicile and remittance basis rules from 6 April 2013 and onwards. 

For most taxpayers, it will be clear whether they are resident in the UK. However, for taxpayers with complex circumstances the statutory resident test (SRT) will help provide more clarity as to their residency status in the UK. UK residents are usually taxed on the arising basis of taxation. This means that all their worldwide income and gains will be taxable in the UK. 

Under new rules that came into effect from 6 April 2017, any person who has been resident in the UK for more than 15 of the previous 20 years are deemed to be domiciled in the UK for tax purposes. In addition, individuals who were born in the UK, to UK domiciled parents, are no longer able to claim non-domiciled status whilst they are resident in the UK. 

Non-doms that remain unaffected by these changes and wish to retain access to the remittance basis of taxation must pay an additional sum in addition to the tax on any income or gains remitted. This sum is known as the Remittance Basis Charge (RBC). The RBC charge for individuals who have been UK resident for at least 7 of the last 9 years is £30,000. The charge for individuals who have been resident in the UK for at least 12 of the last 14 years is £60,000. 

In many cases, relief is given in the UK for foreign tax paid on foreign income and gains under Double Taxation Agreements or via unilateral relief.

Source: HM Revenue & Customs | 04-05-2021

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