UK Residency and Domicile
Residency and Domicile
Your residence and domicile status will determine how you are taxed in the UK.
Individuals who are resident and domiciled in the UK are subject to UK tax on their worldwide income and gains.
For US citizens resident in the UK who report their worldwide income in both jurisdictions, the US/UK double taxation agreement can help to eliminate double taxation in instances where the US and the UK may both try to tax the same income.
Non-UK resident and/or non-UK domiciled individuals are subject to special rules which can shield foreign income and gains from taxation in the UK. In instances where a US citizen's foreign income and gains are not taxable in the UK, the income will generally be charged to US tax instead (albeit probably at a lower rate of tax, given the lower effective rates and higher tax brackets in the US vs the UK). For more information, see the Arising Basis vs the Remittance Basis.
Residence
The UK has a Statutory Residence Test (SRT) which came into effect on 6 April 2013. The SRT is set out in UK tax law and is used to determine your UK tax residence position.
You are likely to be UK tax resident if:
Even if you do not meet one of these tests, you may still be UK tax resident depending on how much time you spend in the UK during a tax year (or over a number of years) and the number of connections you have to the UK. Generally, the more time you spend in the UK, the less connections are needed for you to be regarded as UK tax resident.
Those considered UK tax resident under the SRT are generally considered to be resident for the entire tax year, although there may be the ability to split the tax year into a "residence period" and a "non-residence period" in the year of arrival to, or departure from, the UK. If you are considered a dual resident (i.e. a tax resident of the UK and another country at the same time), it may be possible to use a tax treaty to tie break your residence so you are not regarded as a UK tax resident.
Using the SRT to determine an individual's UK tax residence position can be complex, though the expert team at Jaffe & Co are well-versed to assist you with determining your tax residency.
Your residence and domicile status will determine how you are taxed in the UK.
Individuals who are resident and domiciled in the UK are subject to UK tax on their worldwide income and gains.
For US citizens resident in the UK who report their worldwide income in both jurisdictions, the US/UK double taxation agreement can help to eliminate double taxation in instances where the US and the UK may both try to tax the same income.
Non-UK resident and/or non-UK domiciled individuals are subject to special rules which can shield foreign income and gains from taxation in the UK. In instances where a US citizen's foreign income and gains are not taxable in the UK, the income will generally be charged to US tax instead (albeit probably at a lower rate of tax, given the lower effective rates and higher tax brackets in the US vs the UK). For more information, see the Arising Basis vs the Remittance Basis.
Residence
The UK has a Statutory Residence Test (SRT) which came into effect on 6 April 2013. The SRT is set out in UK tax law and is used to determine your UK tax residence position.
You are likely to be UK tax resident if:
- You spend more than 183 days in the UK during a tax year; or
- Have a home in the UK but do not have a home overseas; or
- You work full time in the UK over a 365 day period (not necessarily a tax year).
Even if you do not meet one of these tests, you may still be UK tax resident depending on how much time you spend in the UK during a tax year (or over a number of years) and the number of connections you have to the UK. Generally, the more time you spend in the UK, the less connections are needed for you to be regarded as UK tax resident.
Those considered UK tax resident under the SRT are generally considered to be resident for the entire tax year, although there may be the ability to split the tax year into a "residence period" and a "non-residence period" in the year of arrival to, or departure from, the UK. If you are considered a dual resident (i.e. a tax resident of the UK and another country at the same time), it may be possible to use a tax treaty to tie break your residence so you are not regarded as a UK tax resident.
Using the SRT to determine an individual's UK tax residence position can be complex, though the expert team at Jaffe & Co are well-versed to assist you with determining your tax residency.
Domicile
Domicile, for UK tax purposes, is a general legal concept that is distinct from nationality, citizenship or residence. While the determining factors can be complex, your domicile is generally considered to be the country where you consider your "roots" to be, or where you intend to live out your dying days.
An individual usually acquires a domicile at birth, though this may not be the country they were born in or are currently living in. It is only possible to have one domicile at any given time; the three main types are:
With effect from 6 April 2017, an individual who is not UK domiciled will become "deemed UK domiciled" and subject to UK income and inheritance tax on their worldwide income and assets if they:
UK tax services are provided by Jaffe UK Services Ltd, a Jaffe & Co group company, company number 11588450.
Domicile, for UK tax purposes, is a general legal concept that is distinct from nationality, citizenship or residence. While the determining factors can be complex, your domicile is generally considered to be the country where you consider your "roots" to be, or where you intend to live out your dying days.
An individual usually acquires a domicile at birth, though this may not be the country they were born in or are currently living in. It is only possible to have one domicile at any given time; the three main types are:
- Domicile of origin - Acquired at birth and normally your fathers domicile at that time;
- Domicile of dependence - May affect an individual until they are 16 yrs old or a wife married before 1 Jan 1974;
- Domicile of choice - Once an individual reaches 16 years of age they can take steps to establish a domicile of choice, although this can be quite a difficult task.
With effect from 6 April 2017, an individual who is not UK domiciled will become "deemed UK domiciled" and subject to UK income and inheritance tax on their worldwide income and assets if they:
- Are non-UK domiciled but were born in the UK with a UK domicile of origin; or
- Have been a UK tax resident for 15 out of the previous 20 tax years.
UK tax services are provided by Jaffe UK Services Ltd, a Jaffe & Co group company, company number 11588450.
Our motto: "Never ignore a letter from the IRS (or HMRC)"