UK Tax Residency Rules: Simple Guide
- Omar Aswat
- Feb 29, 2024
- 2 min read
Navigating the intricate rules of UK tax residence (deemed domicile) can be challenging. Here's a breakdown to guide you through:
Table of Contents
Deemed Domicile for UK Tax Residence
Understanding deemed domicile status is crucial for tax purposes. Generally, an individual becomes deemed domiciled for UK Tax Residence after meeting the 15 out of 20-year test. This status impacts various taxes, notably income tax and capital gains tax, and determines access to the remittance basis, a key consideration for tax planning.
Implications for Inheritance Tax
For inheritance tax (IHT), individuals classified as UK Tax Residents, "domiciled", or "deemed domiciled" are subject to UK IHT on worldwide assets. Non-domiciled individuals are only liable for UK situs assets.
Losing and Regaining Deemed Domicile Status
Taxpayers can shed their deemed domicile status by being non-resident for three complete tax years. This provision assists long-term residents wishing to avoid the new rules introduced in April 2017. Restarting the 15-year test for income tax and CGT requires being non-resident in the UK for six complete tax years before becoming a UK resident again.
Exceptions and Unaffected Individuals
Individuals who were not UK residents after April 5, 2017, remain unaffected by the new rules. Previous IHT deemed domicile rules, such as the three-year rule or the 17 out of 20 tax years rule, still apply.
These tax matters are complex. It's crucial to seek professional advice tailored to your specific circumstances. Our team specialises in these areas and is here to help.
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Meet Omar Omar is a Chartered Tax Advisor (a.k.a an expert on tax issues) and founder of ASWATAX. He regularly shares his knowledge and best advice here in his blog and on other channels such as LinkedIn. Book a call today to learn more about what Omar and ASWATAX can do for you.
*Disclaimer: ASWATAX is a firm of Chartered Tax Advisors, and we strive to provide accurate, up-to-date tax insights. Tax laws may change, so this content is for general guidance only and not a substitute for professional advice. Seek independent tax and legal counsel before making decisions. ASWATAX is not liable for any loss from reliance on this information. Use at your own risk.
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