Is Domiciled status affected when you become British citizen

[maths]

A child's domicile (of dependence) follows that of the father until age 16.

At age 16 the child's domicile of dependence becomes a domicile of choice. If the child's domicile at age 16 is non-UK and at age 16 the child does not intend to reside permanently in the UK then his non-UK domicile continues.

[mickael28]

Thank you very much maths, understood now.

[Roger Bailey]

In the UK ,domicile is only relevant if it impacts on your IT,CGT or IHT.When you moved to the UK you would have been considered to have made UK your domicile of choice initially. You could have filled in a DOM 1 Form claiming that you wanted to retain your domicile of origin and would have had to persuade HMRC that you intended moving back to your domicile of origin at some stage as you had retained connections, such as owning property, buying a burial plot etc. For IT and CGT purposes it works on a year to year basis. Prior to 1998 ,if you had filled in the DOM 1 Form and HMRC had accepted that you could retain your previous domicile of origin you would have been able to declare your foreign income on the remittance basis and possibly obtained significant tax reductions. This all changed in 1998 and since then you have to either accept to pay UK taxes like every other UK resident or pay £30000 per annum if you still want to claim remittance basis taxation. Your children would take your domicile at the date of their birth, so probably UK, but this is not relevant unless there are any tax implications for them.

Your domicile ,as it impacts on IHT is different though, and can only be decided when you die ,as it can change throughout your lifetime. It will only be looked at then if you are liable for IHT. In any case, even if you have claimed to be non UK domiciled for IT and CGT purposes you would be deemed UK domiclied if you had been resident in the UK for 17 of the previous 23 years.

Hope this helps

[mickael28]

When you moved to the UK you would have been considered to have made UK your domicile of choice initially. You could have filled in a DOM 1 Form claiming that you wanted to retain your domicile of origin and would have had to persuade HMRC that you intended moving back to your domicile of origin at some stage as you had retained connections, such as owning property, buying a burial plot etc.

I've never heard about that DOM 1 Form but I've not completed anything and I've always ticked the 'non dom' box in the tax return (as suggested by my accountant).

My understanding was that it's pretty difficult to change your original domiciled status though, ie, that you won't just be considered to have a new UK domicile by just moving here (independently of you filling in any form) and that it'd be pretty difficult to HMRC to prove otherwise.

[maths]

When you moved to the UK you would have been considered to have made UK your domicile of choice initially.

You could have filled in a DOM 1 Form claiming that you wanted to retain your domicile of origin and would have had to persuade HMRC that you intended moving back to your domicile of origin at some stage as you had retained connections, such as owning property, buying a burial plot etc.

Both of the above statements are completely incorrect; see my earlier postings.

[Roger Bailey]

Hi Maths,
I don't think either of my statements are wrong. You have to consider them as regards to IT, CGT and IHT. Have a look at SATR's prior to 2008. When my wife and I moved back to the UK from the UAE in 1996 my wife wanted to claim remittance basis taxation. To do this she had to fill in Form DOM 1 This was granted. Her domicile of origin ( New Zealand) was retained for IT and CGT purposes. There were further issues with IHT as at that time, if I had died and my wife inherited my Estate and she was considered NZ domiciled, IHT would have been payable on the amount that exceeded the NRB plus £55000. My wife's domicile for IHT purposes could only be decided after she died and all the facts had been looked at but as from 6/4/2012 she is deemed domiciled in the UK.

See below.

regards

Roger






Revenue & Customs Brief 17/09

Residence, Domicile and the Remittance Basis: Operational changes

The Finance Act 2008 made a number of changes to the remittance basis tax rules and some changes to the residence rules. These changes followed the ending of the review of residence and domicile which started in 2002. The changes can be found in sections 24 and 25 and Schedule 7 of the Finance Act 2008 but can be summarised broadly as:
•Most individuals now need to make an annual claim to the remittance basis.
•Individuals claiming the remittance basis of taxation, where they have unremitted foreign income or gains of £2,000 or more arising in the tax year, lose their entitlement to personal allowances and the annual exempt amount for Capital Gains Tax.
•The introduction of an annual £30,000 tax charge for adult remittance basis users resident in the UK in the current year and for seven or more of the previous nine years where they have unremitted foreign income or gains of £2,000 or more in the current year.
•Changing the day counting rules that determine when someone becomes resident in the UK under the 183-day rule to count as a day any day upon which an individual is in the UK at the end of that day (ie at midnight), subject to a new rule for transit passengers.
•Closure of a number of loopholes and flaws in the remittance basis that allowed people to bring untaxed income or gains into the UK tax-free.

In the light of these changes HM Revenue & Customs (HMRC) is making some changes to the way we deal with residence, domicile and the remittance basis of taxation.

[Roger Bailey]

Hi Michael,

You never lose your domicile of origin permanantly as it is a fact. You can have one or more domiciles of choice during your lifetime though, and on your death ,if there are uk tax issues ,it has to be decided whether you are UK domiciled, domiciled elsewhere or you still retain your domicile of origin.

To give you an example. I worked with a friend in the UAE from 1978 until 1983. He was a partner in a Company there. His domicile of origin was Pakistan but he moved to UK to go to University prior to this period, got a UK passport and bought a house hin the UK. Unfortunately he was killed in a plane crash and buried in the UAE in 1983 ,together with his wife and eldest child. None of his family were resident in the UK and lawyers were appointed as executors of his Estate. Obviously HMRC would have liked him to be considered as UK domiciled as then they could charge IHT on his worldwide Estate. In the end, it had to go to Court and they ruled that he was domiciled in Pakistan. IHT was paid in the UK on his UK assets only. The rest of his Estate was dealt with under Sharia law in Pakistan and the UAE. The UK Estate was also divded as per Sharia Law.

Regards

Roger

[Roger Bailey]

[PDF]



INCOME AND CHARGEABLE GAINS - DOMICILE DOM 1
Hi Michael,

If you go to this website you can see the old DOM 1 Form.

www.frankhirth.com/.../Registration_Non ... ty_Dom.pdf





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File Format: PDF/Adobe Acrobat - Quick View
DOM 1. District date stamp. 1. a. Do you have any income arising abroad or gains on assets situated ... below and return this form to me. Signature. Date. No

[maths]

Whilst I understand a number of your comments in the context they are made you appear to draw inferences/conclusions from them which are not correct and could mislead "mickael28"

Domicile is determined under common law irrespective of any tax considerations (except for IHT in some cases).

If a non-UK domiciled individual arrives in the UK possessing his domicile of origin this domicile subsists unless the individual chooses to make the UK (again, strictly, an English/Welsh or Scottish or N Ireland) domicile of choice.

On arrival there is no presumption (as you suggest) that he has acquired a UK domicile of choice. Were HMRC to so suggest this the onus of proof resides with HMRC, not the individual.

Form DOM1 is now obsolete in view of the FA 2008 changes and indeed never in fact needed to be completed as it was not a statutory form.

[Roger Bailey]

Hi Maths,

Perhaps I was a bit simplistic in trying to explain the situation. I agree that the DOM 1 was not a statutory Form and initially the onus was on the OP as to whether to fill it in or not. There would have been no need for the OP to fill the Form in if he did not have any foreign income or gains but if he did ,he would have had to pay tax on these just as a normal UK domiciled UK Resident and complete an SATR. If the OP also wanted to claim remittance basis taxation he would have had to mention this on the SATR and if he didn't also submit the DOM 1 Form HMRC would have asked him to do so. That is what happened in my case.

Regards

Roger