Non-domicile for temporary UK residence

[Pepper]

My husband is a British national who has been living with me in Asia for 22 years. I am Asian but have acquired British passport by marriage. He is due to retire soon and we plan to move back to the U.K. for 3-5 years to see our son through his U.K. education only. After that we will return to Asia to live permanently. An offshore Trust has been set up for our son. We want to apply for non-domicile status in order that our income from investments would not be subject to tax. But if our stay in the UK is only temporary, is this application necessary?

[Huw Williams]

If you live in the UK for a few years, you will be UK resident and therefore liable to tax on your income.

The question of domicile can then become important in deciding whether income arising outside the UK is taxable in the UK.

The UK tax system requires an annual tax return and one of the forms which can be attached to this return is a claim that you are not domiciled in the UK. (Indeed it should be attached if it affects your tax libaility).

Also when you come to the UK you can notify the UK tax authorities of your intention to live here for a while. The main form (P86) for this asks if your domicile status will affect your tax liability and then points you to another form (dom1) to give more details about your domicile status.

Both can be found on the Revenue website at http://www.inlandrevenue.gov.uk/cnr/p86_dom1.htm.


Huw Williams
Nottingham

0115 914 6846

enquiries@huwwilliams.co.uk

[Pepper]

Thank you so much for your helpful reply Huw. I have now seen both forms from the website. If we plan to land in the U.K. on 01Jan 06, when do we send in the forms - before or after we land? Do we need to go to a tax advisor to do it for us, or can we send it in ourselves? Also, if the UK tax year begins every April, is there an advantage for us to delay our landing until Apr 06?

[Huw Williams]

There is no time limit on sending in the forms that I am aware of. So you could send them in before you come, or after you have arrived - whichever is easier.

You can complete them yourselves, but you may prefer to obtain professional help in understanding what the questions are there for and how the Revenue would understand your answers.

As to the timing, tax residence is usually for a complete tax year unless you are within some special rules for employees. If you are here for at least 6 months in a tax year, you are resident, otherwise you are unlikely to be resident until the following 6 April.

So whether you come in January or April, I would expect you to become tax resident on 6 April (unless you have employment to come to).

Of course you should not take what is said here as the final answer as you have only outlined the circumstances in an area of law which can be difficult to interpret.



Huw Williams
Nottingham

0115 914 6846

enquiries@huwwilliams.co.uk