Immigration and citizenship

Not necessarily. The concepts of “domicile” and “citizenship” are not one and the same. After all, it’s possible for British expats who have permanently left the UK to be non-UK domiciled.

Equally, an individual can have several citizenships and passports but under English law have only one domicile. Becoming a British citizen by naturalisation therefore does not, in isolation, mean that someone acquires a UK domicile.

Remaining non-UK domiciled for an individual is significant for UK tax purposes. It means that UK inheritance does not apply to their worldwide estate but instead applies only to their: (i) assets situated in the UK; (ii) interests (e.g. shares or loans) in non-UK companies holding UK residential property; and (iii) the benefit of loans used by the borrower to finance the acquisition, maintenance or enhancement of UK residential property. It also means they can be taxed on the remittance basis.

Domicile under English law is based on a person’s intentions and connections to a particular jurisdiction. Very broadly, an individual is domiciled in a jurisdiction that they consider to be their permanent home and with which they have the most connections. There are three types of domicile: domicile of origin, dependence or choice. In general, an individual has a non-UK domicile of origin if at the time of their birth their parents were married and their father had a non-UK domicile. Their non-UK domicile of origin subsists so long as they do not acquire a domicile of choice in the UK by: (i) residing in the UK; and (ii) forming the intention to remain living here permanently or indefinitely.

Applying for British citizenship by naturalisation requires an individual to have spent a significant number of days residing in the UK for at least five years and to confirm the intention to make the UK their principal home. Furthermore, current Home Office guidance raises an inference that naturalisation applications will be refused if the individual intends to maintain a domicile outside of the UK. Evidently, for a non-UK domiciliary being granted with British citizenship these factors could raise a presumption that they have acquired (or are at risk of acquiring) a UK domicile of choice. While naturalising invites questions regarding an individual’s non-UK domicile status, it is by no means conclusive. Citizenship is only one relevant factor of many that must be taken into account when determining an individual’s domicile.

A risk-based approach and assessment must therefore be taken to consider what impact (if any) applying for British citizenship could have for a non-UK domiciliary and if there are other key factors in their particular circumstances that keep the scales firmly tilted towards maintaining their domicile position.

Having ILR is a privileged position for a non-UK national, as it broadly means they are permitted to stay in the UK free of any conditions or restrictions that were previously imposed upon them when they had a UK visa to stay here.

Such advantages make ILR similar (but not identical) to being a British citizen, and for those whose country of nationality does not permit them to have multiple nationalities, acquiring ILR in the UK is the most optimal position for them from a UK immigration perspective.

The “indefinite” part of ILR is misleading however, as the status can be lost in some cases. This can happen when for example an individual is outside the UK (or Ireland or the Crown Dependencies) for a continuous period of 2 or more years. In this situation, ILR lapses automatically despite the person retaining a UK travel document (such as a Biometric Residence Permit) recording their ILR status. One would be forgiven for thinking that the simple answer is to return to the UK periodically for short stays every now and again to avoid losing ILR; unfortunately, this is not without its risks. The Immigration Rules contain a provision that an overseas national with ILR may retain that status only if they are re-entering the UK for the purposes of settlement here. They could therefore be denied re-entry and have their ILR status revoked even if they have not been absent from the UK continuously for two years or more if the UK immigration authorities have reason to believe they are merely visiting the UK as opposed to living here. Whether a person who is required to work for long periods overseas could lose their ILR as a result therefore depends on the particular facts and circumstances, including whether they continue to maintain a home in the UK and other strong ties to the UK.

Senior executives with ILR contemplating roles abroad may want to consider applying to naturalise as a British citizen and consequently obtain a British passport. This would provide them with more certainty and flexibility regarding their ability to reside in the UK compared to having ILR. For those unable to have multiple nationalities, it is possible to revive ILR status if they are in the unenviable position of having lost it. This would require them to apply as a ‘Returning Resident’ which involves having to evidence to the UK immigration authorities their strong ties to the UK, current circumstances and reasons behind the UK absence(s). Prevention is better than cure, so anyone with ILR who anticipates needing to spend significant periods outside the UK should seek advice as early as possible to find out if any appropriate planning could be done.