Remaining Non-Domiciled

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.

For more information or advice, please contact Alfred Liu, Partner in our Private Client team.

Senior Executives: thinking of relocating to the UK?

When the employee has relocated to the UK and employment has started

• What factors other than citizenship will be taken into account in determining my domicile status and, if I do become UK domiciled, can I reverse the position?
• I am being offered Crypto tokens as an incentive by my employer. How will I be taxed?
• I've bought a house in the UK, as my job will keep me here for 5 years or more. The conveyancer suggested I should put a will in place to deal with the house and I have done this. The will covers all my assets, wherever they are, so brings in my assets
• Once I become UK resident, can I avail myself of the remittance basis in respect of any income or gains arising on my cryptoassets?
• I have old US stock options granted 2 years ago by my then US employer over shares in the US top company of the group granted when my duties were solely in the US. I am now employed by the wholly owned UK subsidiary: do I pay UK taxes on vesting?

Please do contact any member of our Sen Ex Advisory Group to suggest a question or to find out more about how we can help.

Non-dom rules to be replaced with four-year temporary residence regime

The Chancellor of the Exchequer, Jeremy Hunt, has announced that the government will abolish the current tax regime for individuals who are UK resident but not UK domiciled in favour of a residency-based system, which will apply from 6 April 2025.

Senior Executives: thinking of relocating to the UK?

We answer common questions raised at key stages of the relocation process.