course, this isn’t always a given any more. Lots of people are born in one place, move somewhere else to study and then work in a completely different country. It’s increasingly common to retire to a new country. Could this affect you? Here’s my beginners’ guide to the domicile rules.
HOW IS YOUR DOMICILE DECIDED?
Your domicile will usually be your country of birth, acquired through your parents. If there’s any doubt, perhaps because your parents come from two different countries, it’s typically decided through your father. Obviously, the law around wills is still firmly rooted somewhere in the 18th century. If you were born in another country because your parents were working out there, your domicile will still be their home country.
Generally speaking, your domicile is the place you consider home and intend to spend the rest of your life. That applies even if you spend a few months a year somewhere else.
WHAT IF I STUDIED ABROAD?
If you were born in one country and went to university somewhere else, your domicile will depend on what you do next. You can be deemed domiciled in the UK if you’ve spent 15 out of the last 20 tax years here and your time as a student will count towards that.
I had a client who was born in India and came to university here. She went back to India and got married but then moved back to the UK when they separated. She’ll be classed as being UK domiciled if she’s still here in 12 years’ time. It’s a trade-off; there’s no inheritance tax in India but she’s building a life here.
HOW EASY IS IT TO CHANGE MY DOMICILE?
It can be difficult to change your domicile. If you’ve moved somewhere else from the UK it takes a long time for your domicile to change and you need to have renounced your original country. Even taking citizenship somewhere else won’t necessarily do it. HMRC will look at whether you’ve broken your links with your original country and built them somewhere else. If you’ve sold property in your home country and bought a home here, they can deem you as being domiciled in the UK.
It can get complicated, especially if you’ve moved around a lot, so it’s always a good idea to get professional advice.
WILL A HOLIDAY HOME AFFECT WHERE I’M DOMICILED?
You might have got this far and be wondering whether these rules will affect you. If you’ve moved away from your home country permanently it may be possible to keep a holiday home there. Here in England & Wales HMRC would look carefully at how often a property is available to you, who owns that property and if you rent it out commercially. You can also own property in other countries without it affecting your domicile. Your domicile is the place that you call home and intend to live for the rest of your life. It sounds simple, but it can be very complicated, especially when there are potentially large tax bills at stake. A professional will writer will be able to advise you on your individual situation.
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