speedbirdhopeful1
Being domiciled does become a factor in tax implications.
Being domiciled in a Country is different to being resident but they are intrinsically linked when it comes to whether tax is payable on earnings. The definition of domicile will depend on which country defines it, but in basic generic terms this would be a legal residence in which a person has a fixed dwelling with the intention of making it his/her permanent home. It can also factor in residence and intent to remain. Domicile of origin can be influenced by country of birth, Father's birth country and a few other factors. Country of residence is different altogether.
In 2013, the UK government implemented new rules to determine whether income tax can be applied to an individual's earnings. They apply the SRT (Statutory Residence Tests) which consist of 3 tests being applied in the following order:
1) Automatic Overseas Test
2) Automatic UK Test
3) Sufficient Ties Test
Each of these tests have a number of further specific tests. This will determine your residence status and how you will be taxed. This is where the domicile part now comes into play. If your wife is living full time in UK, the children are going to school in the UK and you have a house of permanent dwelling for you or your family, you will have 'ties' with the UK. So, whilst strictly true that income tax is not directly related to country of domicile, indirectly it is and can affect you tax liability.
To compound the confusion, it's quite possible to pay UK tax on income derived above your personal tax allowance, despite being classed non resident. For example, you could do numerous 24 hour layovers to the UK in a year as well as say 60 days holiday there. Providing you have no UK sourced income that puts you above the tax free allowance, you will have no liability, providing of course all the other tests are passed! However, if you have just one rental property that earns more than the personal tax allowance, you will be liable for any other income earned in UK, regardless of time spent there. So, just one 24 hr turnaround flight to LHR in the whole year will have a tax implication because a portion of your salary is being paid to you whilst you're laying over in the UK. It's not a lot, but it is payable under the current rules. However, 50, 60 or even 70 days spent there on vacation have no effect as you're not 'earning'.
You say they simplified the rules, I'd beg to differ. They have made the determination less subjective by incorporating a more complicated checklist and process to follow.
What we do agree on is that any expat with an interest in the UK MUST seek an expert's advice before assuming they're not subject to income tax
Harry
Last edited by harry the cod; 12th Mar 2017 at 19:37.