Reuters news agency has recently posted an article Elite Group of British-Born Residents Enjoy 'non-Dom' Tax Haven which says that in 2012/13 there were 800 individuals who were born in the UK but who claimed not to be domiciled in the UK (England and Wales, etc., for the pedants).
While the article does acknowledge that one’s initial domicile – domicile of origin – is inherited from one’s father’s domicile (or the mother’s in some cases), it seems to miss the point of domicile, by suggesting it is a “tax privilege”. Domicile is not created or determined by tax law: it is merely observed. Furthermore, in referring to these 800 individuals as ‘an elite’, it arguably overlooks that there will almost certainly be very many more UK-born individuals who are eligible to claim but do not do so, either through ignorance or choice.
Very conservatively, there must surely be tens of thousands of sons and daughters born in the UK but to parents who were domiciled overseas at the child’s birth. It is likely in many cases that the son or daughter will then acquire a UK domicile of dependency, if the relevant parent subsequently chooses to acquire UK domicile, or latterly a UK domicile of their own choice if as adults they make the UK their permanent home. But this will not always be the case. If the parents do not intend to make the UK their permanent home, then the son or daughter may still have an overseas domicile of origin at majority, even if they have never left the UK, such is the ‘stickiness’ of domicile.
It is therefore surprising that so few people born in the UK actually claim the remittance basis – particularly if, as seems to be the case, this number also includes those who had a domicile of origin in the UK (i.e., UK-domicile parents in the first place) and have then acquired a domicile of choice overseas.
Domicile is of course largely irrelevant unless the taxpayer has significant overseas financial interests but even then just 800 persons seems vanishingly small. Perhaps the figure would be much larger, if more people were aware of the implications. The Reuters article suggests that this domicile is a bit of a wheeze for the ultra-rich. But it doesn’t mention the implications for those UK domiciled individuals who retire overseas, and then “find” HMRC wants to tax their worldwide estate 20 or 30 years later. Given that so many UK citizens retire to sunnier climes, how many non-resident estates did HMRC tax in 2012/13, thanks to domicile of origin?