Sign up for our newsletter
Useful Cyprus Information Cyprus Government Websites Currency Converter Cyprus Property News Limassol Marina CyprusNewsReport.comUK Tax - Domicile Issues
Information for Cyprus Expats who may believe they are not UK Resident and may still be liable for UK Tax
How does domicile affect your UK Income Tax and
Capital Gains Tax liability?
For Income Tax and Capital Gains Tax purposes, whether or not you are domiciled in the UK is generally relevant only if you have foreign income and/or gains during a tax year. If you do not have foreign income and/or gains then your domicile status has no bearing on your UK Income Tax or Capital Gains Tax position and you do not need to consider it. The information in this guidance does not cover Inheritance Tax.
The guidance we provide here will help you, when your affairs are straightforward, to reach a decision on your domicile status. If your affairs are more complex, we direct you to where you can obtain further guidance. We also recommend that you speak to us so we can give you further guidance or that you seek advice from a professional tax adviser.
The fact that you were born in the UK, have lived here for most of your life or are now living here permanently gives a good indication that you might be domiciled in the UK, but this is a complicated, legal issue and you might want to seek professional advice if you are unsure about your domicile status.
If you have foreign income and/or gains then your domicile might have a bearing on what UK tax you pay on those foreign income and/or gains. If you are resident but are not domiciled in the UK, although you will still have to pay UK tax on any income and/or gains which arise or accrue here, you might wish to claim the remittance basis of taxation for your foreign income and/or gains
We are unlikely to challenge any person who says they have a UK domicile. But if you say that you have a non-UK domicile, we might want to enquire whether or not that is correct, particularly if you were born in the UK. By its very nature an enquiry aimed at establishing your domicile will be an in-depth examination of your background, lifestyle and intentions over the course of your lifetime. Any enquiry of this sort will extend to areas of your life, and that of your family, that you might not normally think are relevant to your UK tax affairs. We will need to ask these questions and sometimes ask you to provide us with evidence as part of an enquiry into your domicile status.
What does domicile mean?
Domicile is a matter of general law; not of tax law. There are many things which affect your domicile. Some of the main points you should consider if you are claiming not to be domiciled in the UK are:
• you cannot be without a domicile
• you can only have one domicile at a time
• you are normally domiciled in the country where you have your
permanent home
• your existing domicile will continue until you acquire a new one
• domicile is distinct from nationality and residence, although both can have an impact on your domicile
• the fact that you register and vote as an overseas elector is not normally taken into account when deciding whether or not you are domiciled in the UK.
Any references we make to being ‘domiciled in the UK’ are references to being domiciled in any part of the UK.
The UK has three territories for domicile:
England and Wales, Scotland; and Northern Ireland.
If you require more detailed information on domicile for Income Tax and Capital Gains Tax purposes you should refer to the Residence, Domicile and Remittance Basis Manual which can be found at www.hmrc.gov.uk
Your domicile status may also be relevant for Inheritance Tax and you
should refer to the booklet Customer Guide to Inheritance Tax for more details.
What types of domicile are there?
There are three types of domicile. These are:
• domicile of origin
• domicile of choice
• domicile of dependence.
Domicile of origin
You normally acquire a domicile of origin from your father when you are born (see also ‘domicile of dependence’). It need not be the country in which you were born – for example you might have been born in a country which was not the country in which your father was domiciled at the time of your birth. A domicile of origin may change as a result of adoption, but otherwise is not easy to displace, although it can occur. If you leave the country of your domicile of origin, you will continue to be domiciled there until you acquire a domicile of
choice elsewhere.
The fact that you were born in the UK does not automatically mean that you are domiciled here. You might have been born in the UK to a non-UK domiciled father and then moved to another non-UK country. Regardless of the fact that you were born in the UK, your domicile of origin would be the same as your father – non-UK. If you return to the UK and are not planning to remain here permanently or indefinitely, then you will continue to be domiciled outside the UK. If your parents were not married at the time of your birth, you would acquire your domicile of origin from your mother.
Example – domicile of origin
If you were born in the UK and your father was a non-UK domiciled soldier of a foreign nation serving in the UK, your domicile of origin would be the same as your father – non-UK and in the place your father was domiciled.
If your non-UK domiciled father dies when you are a child, and you are adopted by a UK domiciled father, your domicile of origin will change to a UK domicile as a result of your adoption. Your original domicile of origin has been changed.
Domicile of choice
You have a legal capacity to acquire a new domicile at the age of 16 (earlier in Scotland). Broadly, to acquire a domicile of choice, you must leave your current country of domicile and settle in another country. Or, if you are already living in a country other than that of your domicile, you will acquire a domicile of choice there if you intend to remain permanently or indefinitely. In either case you need to provide strong evidence that you intend to live there permanently or indefinitely. The following factors will be relevant, though this list is not exhaustive:
• your intentions
• your permanent residence
• your business interests
• your social and family interests
• your ownership of property
• the form of any Will you have made.
Example – domicile of choice when not living in the country of your domicile of origin
If you were born in the UK and your father was a non-UK domiciled person working in the UK while you were a child your domicile of origin would be the same as the non-UK domicile of your father.
You were brought up, educated and start work in the UK. When you are 21 your father retires from his job and decides to return to his country of domicile. You have since bought a home and married and you have made the UK your permanent home which you do not intend to leave.
You will not be joining your father abroad for anything other than an occasional visit. By deciding to stay in the UK permanently or indefinitely you have established a domicile of choice in the UK.
Domicile of dependence
Until you have the legal capacity to change it, your domicile will follow that of the person on whom you are legally dependent. If the domicile of that person changes, you will automatically acquire the same domicile, and your domicile of origin will become dormant. Before 1974, a married woman automatically acquired her husband’s domicile. As a married woman, who married before 1974, you would retain your husband’s domicile until you legally acquire a new domicile. But, if you are a woman who married on or after 1 January 1974, your domicile is not necessarily the same as your husband’s. Your domicile will be decided in the same way as any other individual who is able to have an independent domicile.
An exception to the general position up to 31 December 1973 is given by the Double Taxation Agreement between the UK and the USA, which provides that a marriage before 1974 between a woman who is a US national and a man domiciled within the UK is deemed to have taken place on 1 January 1974.
Example – domicile of dependence
You are a woman with a domicile of origin outside the UK who married a man domiciled within the UK in January 1970. Upon marriage you became UK domiciled - your ‘domicile of dependence’ being the same as your husband’s domicile. As from 1 January 1974 you can acquire an independent domicile of choice, which could be different from your husband’s domicile by settling elsewhere.
Source HMRC - Further information may be found on the HMRC website
If you would like to make a Will to help with your residency status in Cyprus, our Cyprus Expat Legal Services have qualified lawyers in both UK & Cyprus law. Please use our Contact Form for more information.
More Cyprus Information
Moving To Cyprus - UK Tax Issues
Useful Cyprus Information Cyprus Expat Advice Team
Cyprus Business Directory Jobs Cyprus Property Listings
Cyprus Marketplace Classified Ads Transaltion Service
Legal Services Cyprus Car Hire CyprusNews Property Finders Service
Cyprus Photos Foreign Exchange Online Shopping
Tags cyprus expats moving to cyprus cyprus information uk tax hmrc domicile returning to the uk residency
