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15 April 2022

Non-domicile status

It has been a traumatic week for those of non-UK domicile living in the UK. With leaked info, of a personal nature, causing much soul-searching and consternation, at the same time there suddenly have been calls to for tax law to change. Those suggesting a time for change include academic professors as well as the journalists seeking to keep the issue on the front page of their newspapers.

Ever since income tax was introduced, the concept of being non-UK domiciled has always been part of UK tax law, where unremitted foreign income can be excluded from UK tax assessments, subject to a charge being applied once deemed to be UK resident in at least 7 years out of a 9-year period.

This concept still exists after more than 200 years and is available to those who do not intend to settle in the UK in the long term. While the taxpayer is alive, tax law as it exists seems to accept that there is always a possibility that the taxpayer will not remain permanently in the UK and allows for non-domicile status to remain until 15 out of a 17-year period of UK residence has occurred.
The option to decline use of the remittance basis of taxation has always been a personal choice, but only now does it seem to be a political matter too.

While the concept is clearly written in tax law, it will be interesting to see what policy changes will come about as a result of this week’s revelations. Lately, however, numerous leaks have been unable to initiate any change whatsoever and it would be a surprise to see change here.

Whatever is decided, compliance will always be the objective.