Affinity Consulting Group


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Affinity Consulting Group


Residence and Domicile

Many clients become confused about the difference between domicile and residence. A client's tax burden will depend on his residence, ordinary residence and domicile. Each of these may be determined differently by different jurisdictions. But a simple guide would be that residence is where a client is living, ordinary residence is the same but extended over several tax years, and domicile is "the country where you have your permanent home", according to the UK Inland Revenue's website.

There are specific tests for residence and ordinary residence, of which the UK's three-month rule is an example, but other factors such as employment contracts and the availability or ownership of property can be taken into account.

Domicile is very much more adhesive, and can only be changed by permanent departure and the explicit adoption of a new domicile of choice. Domicile is usually determined by that of your father unless explicitly changed. Income taxes, capital gains taxes and other personal taxes will generally be levied according to residence, although there are exceptions. inheritance tax (IHT) is payable in your country of domicile.

UK Inland Revenue Definition of Residency

UK Inland Revenue Definition of Domicile

Full UK Inland Revenue Booklet For Expats

Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission. Professional tax advice should always be taken before setting up a trust.

Guide to trusts
Residence & Domicile
Importance of a will or trust for Isle of Man investments