Where you reside has a major impact on your tax implications and in the UK, a Statutory Residence Test (SRT) will help determine whether or not you are resident for tax purposes. It considers how many days you spend in the UK, where your home is and your family ties.

Domicile is not the same as residency.

Your domicile is your permanent home, where you intend to return to live at some point in the future, even if you are not living there at the moment.

UK Resident:
You live in the UK and consider this your permanent home.
You are taxed on your UK income and capital gains.
You are also taxed on your foreign income and capital gains.
This is known as the “arising” form of taxation.

Non UK Domiciled:
You live in the UK but do not consider this to be your permanent home, which is somewhere you intend to return to at some stage.
You are taxed on your UK income and capital gains.
You are also taxed on your foreign income and capital gains and can choose whether this will only be on the part you bring into the UK.
This is known as the “remittance” form of taxation.

The remittance tax rules can be complicated and can vary according to individual circumstances. For instance, there are some elements of foreign income, gains or property deriving from them that are not taxed in the UK and even HMRC’s Statutory Residence Test documentation runs up to 105 pages!

At HA Law, we have extensive experience on advising resident and non-domiciled clients on their tax obligations. We offer a free consultation to discuss the best options to manage and minimise these, so for the best professional advice please contact us.