The 5 types of 'Domicile'

uk expat tax

The 5 types of 'Domicile'

I’ve been a resident of Dubai for 11 years. Where is my “domicile”?

Your domicile is your “home”, the jurisdiction you consider your permanent residence, or have significant ties to, or intend to return to. You may be resident in another place, but residence is generally temporary in nature – even if you’ve found yourself staying longer in the UAE than originally intended! It’s possible to have several places of residence, but only one domicile. Once a person acquires a domicile, he/she retains that domicile until another is acquired.

What factors determine domicile?

There are 5 types of domicile:

Domicile of Origin

This is your initial domicile, acquired at birth. It isn’t dependent on citizenship; rather you acquire your father’s domicile (or mother’s, if your parents were unmarried at the time of your birth). For example, if your domicile is the UK but your children were born here in the UAE, they have British citizenship and their domicile is the UK. However, if your children were born in the US, they will have dual citizenship, but their domicile will be the UK.

Domicile of Dependency

Until the age of 16, a child is considered a dependent and his/her domicile will change along with his/her parent’s.

Domicile of Choice

After the age of 16, it’s possible to acquire a new domicile. However, it isn’t automatic, nor is it a straight-forward process. You must be able to provide evidence that you have “abandoned” your domicile of origin, that you have physically moved to and reside in the new locality, and show intent to remain in your chosen domicile permanently. Some of the factors taxing authorities (and courts) consider to determine your “intent” are:

  • Amount of time you spend in one location versus another
  • Location of your spouse and children;
  • Location of your principal residence;
  • Where your driver’s license was issued;
  • Where your vehicles are registered;
  • Where you maintain your professional licenses;
  • Where you are registered to vote;
  • Location of the banks where you maintain accounts;
  • Location of your real property and investments;
  • Permanence of your work assignments in a location; and
  • Location of your social ties.

If you retain significant ties with your domicile of origin, it’s unlikely that you’ll be able to acquire a domicile of choice. The tax man won’t let you get away easily!

Deemed Domicile

In the UK, if a “non-dom” has been UK resident for 15 of the previous 20 tax years, he/she becomes deemed UK domiciled for all tax purposes.

Elected Domicile

In the UK, a non-dom married to a UK domicile person can elect to be treated as a UK domicile for UK Inheritance Tax (IHT) purposes.

What are the implications of your domicile?

It is key to any financial plan to know your residency and domicile status, in order to determine your tax liabilities in three main areas: income tax (from investment or employment), Capital Gains Tax and IHT. 

For example, someone who is a UK elected domicile will be entitled to full spousal exemption; the married couple can transfer assets between themselves to mitigate their IHT tax liability. IHT will only be payable on the second death.

As with all tax planning matters, we recommend you seek advice of a qualified tax adviser to ensure you are not evading tax – whether accidentally or otherwise.

You can contact us to arrange an appointment with one of our advisers.

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