| p>The Pre-Budget Report of October 2007 | | | | purposes) in 17 out of the previous 20 years of |
| announced a number of proposals, including changes | | | | assessment you will be deemed domiciled in the UK |
| to the tax rules relating to individuals who are UK | | | | even if you intend to return to your home country. Due |
| resident for tax purposes but not UK domicile. | | | | to the tax year in the UK running from 6th April to 5th |
| The concept of domicile is a legal concept. However, | | | | April rather than a calendar year, it is possible to |
| there is no statutory legislation in relation to domicile | | | | become deemed domiciled after only living in the UK |
| and therefore the term is not defined. The guidelines | | | | for 15 or 16 calendar years. |
| are based purely on rulings of the Court and a number | | | | Under current legislation those who are resident but |
| of factors affect your domicile. Generally speaking you | | | | not domiciled in the UK are only taxed on offshore |
| are domiciled in the Country where you have your | | | | income and capital gains if that income or capital gain is |
| permanent home. There are various types of domicile, | | | | remitted into the UK. |
| but only one may apply to you at any one time. You | | | | The most significant proposal announced in the |
| acquire a domicile of origin upon birth which is the place | | | | Pre-Budget Report is to impose an annual levy of |
| your father permanently lives, if the child is born in | | | | £30,000 to those non-domiciles who wish to |
| wedlock, or otherwise from your mother. At the age | | | | preserve the 'remittance basis' of taxation as |
| of 16 you can then loose your domicile of origin and | | | | described above. Whilst non-UK domiciles will continue |
| acquire a domicile of choice, for example if you move | | | | to be able to take advantage of the preferable tax |
| to another country. | | | | treatment available to them, they will only be able to do |
| Due to the tax treatment applied to non-domiciles in | | | | so if they pay this levy. The alternative is not to pay |
| the UK many people wish to reside here but do not | | | | the levy and be subject to UK tax on all worldwide |
| want to acquire a domicile here. Providing your | | | | income and gains. |
| domicile, as discussed above, is not in the UK you will | | | | The proposals have not, as yet, made any changes to |
| receive special tax treatment in respect of income and | | | | the current Inheritance Tax legislation. |
| gains arising outside of the UK. | | | | If we take a basic scenario of an unmarried individual |
| For the purposes of inheritance tax, however, there is | | | | who has UK assets worth £300,000 and |
| an additional form of domicile to consider. Even if you | | | | non-UK assets worth £300,000, therefore total |
| are domiciled outside of the UK under general | | | | assets worth £600,000. If they are non-UK |
| principles there is a special rule which, if applies, will | | | | domiciled there will be no inheritance tax payable. If, |
| result in you having a deemed domicile in the UK. If you | | | | however, they are domiciled in the UK then they will |
| have been resident in the UK (for income tax | | | | incur an inheritance tax bill of £120,000. |