When do you stop becoming a UK domicile?

9 posts in this topic

I will try to be concise with my question. I have been given some recommendations for UK tax advisers, which I will probably employ in the end, but I wanted to ask a general question on here and get some basic pointers.

 

I have UK citizenship, parents are British. I lived in Europe from 1994 until 2016, then in the UK until August 2020, when I relocated to Germany. Paid tax in UK from 2017 up until the tax return I am currently doing for 2020-21.

 

I have a long-term investment in gold which is not taxed in Germany, as I understand. I plan to sell out slowly and while I have no problem with paying CGT in the UK (because there is a threshhold, you can split a sale over two tax years, it is not all that much anyway...), I did wonder about how long I would need to reside in Germany until I can basically escape having to pay HMRC anything? Is it five-six years?

 

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Why do you believe you were ever a UK domiciliary?

 

While it is likely you were at some point in your life, there is nothing in your recitation of facts that mandates that conclusion.

 

A primer:

 

Domicile is a complex and incredibly adhesive UK common law concept. The basic rule is that a person is domiciled in the country in which they have their permanent home – the country regarded as your ‘homeland’. However, you can remain UK-domiciled even after living abroad for many years.

There are three types of domicile under English law: 

  • Domicile of origin – where a child takes their father’s (or single/unmarried mother’s) domicile (not necessarily their country of birth).  
  • Domicile of dependence – applies to women married before 1974 (whose domicile will mirror their husband’s) as well as minors and other legal dependents.
  • Domicile of choice – acquired by moving permanently to another country.


While changing your domicile is possible, this needs to be a carefully considered and planned process as there are no set rules – much depends on your particular circumstances and intentions.

 

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Indeed, and why would you want to do so as this appears to be a tax questions and tax is a question of residence, not domicile, in most countries.

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Yes, pardon, I meant being a UK tax resident.

 

I had been reading about domiciles on the HMRC website, included it in the title of the thread, then when I realised it, found that you cannot edit the title.

 

What I basically am interested in is: how many years can you live in, say, Germany before you can get HMRC off your back completely in terms of paying capital gains tax in the UK?

 

As I say, I am not fussed about paying per se. I am just interested in when I need no longer file tax returns, inform of things relevant to CGT, etc.?

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42 minutes ago, GaryC said:

tax is a question of residence, not domicile, in most countries.

 

That is quite true.

 

However, the Anglo-Saxon concept of "domicile" (in both its UK and US "flavors") remains an important basis for the imposition of both income taxes (especially in the several states of the United States) and the imposition of inheritance/estate/death taxes (especially in the UK).

 

The various factors that are applied to determine the "center of vital interests" that is a key "tie-breaker" in most bilateral tax treaties are very nearly identical to the factors applicable to a determination of Anglo-Saxon law "domicile"; they just don't call it that.

 

"Domicile" remains an important determinant of both procedural and substantive rights in succession to decedent's estates (especially since the European Succession Regulation came into force in August 2015), marital property rights and jurisdictional claims in many types of civil proceedings.

 

The key difference between "residence" and "domicile" is that "residence" is concerned solely with the "where" of a person's past, present and future physical presence and "domicile" is concerned with the "why" of it.

 

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Yes, you are correct, I meant being a UK tax resident.

 

I had been reading about domiciles on the HMRC website, included it in the title of the thread, then when I realised it, found that you cannot edit the title.

 

What I basically am interested in is: how many years can you live in, say, Germany before you can get HMRC off your back completely in terms of paying capital gains tax in the UK?

 

As I say, I am not fussed about paying per se. I am just interested in hearing the experience of other UK passport-holders on when they no longer needed to file tax returns, inform HMRC of things relevant to CGT, etc. after living several years in Germany? I had the feeling it was somewhere in the region of after five-six years.

 

 

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Which is why I posted that link. It provides information for people who a not resident in the UK and the special rules that apply if you make CGT disposals but return to the UK within 5 years.  I think that is what you are getting at?

 

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Yes, that's the one!

 

I would need to investigate further, but I believe you get increasing numbers of days with each year in which you are allowed to "holiday" in the UK. Although that is not really relevant to me. I was looking more for that link (thanks) and to hear from anyone who had been in the same boat (i.e. experiences).

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