UK Summer Budget 2015 – Domicile

UK Summer Budget 2015 – Domicile

The Summer Budget has further restricted the benefits of tax legislation that is relied on by non-UK domiciled individuals in an attempt to redress the perceived unfairness and imbalance between those who are domiciled in the UK and those who are not. 

This is a very brief overview of the detailed measures, which include the following changes:

  • Individuals with a UK domicile of origin, who leave the UK and subsequently return, will be unable to take advantage of any foreign domicile they may acquire; and 
  • Non-UK domiciled individuals with a domicile of origin outside the UK will be deemed domiciled for all tax purposes once they have been resident in the UK for 15 out of the last 20 tax years.

These rules are due to take effect from 6 April 2017, following consultations. There appear to be no grandfathering provisions.

Individuals with a UK Domicile of Origin 

Individuals with a UK domicile of origin, but who acquire a foreign domicile of choice, will be deemed to be UK domiciled for tax purposes on any occasion when they are resident in the UK. They will not therefore be able to claim the remittance basis of taxation and any excluded property trusts, which they set up whilst non-domiciled, will cease to have any tax benefit if the individual returns to the UK. 

There are specific conditions that must be met if such an individual wishes to lose their deemed domicile status. 

Foreign Domicile of Origin

Individuals with a foreign domicile of origin will now be UK deemed domicile for all tax purposes (not just inheritance tax) if they are resident in the UK for 15 out of 20 tax years.  

This means that from the 16th year of residence an individual will be unable to claim the remittance basis for income and capital gains tax purposes and shall be taxed on the arising basis on their worldwide income and gains. They will also subject to inheritance tax on their worldwide estate.

Once a non-domiciled individual leaves the UK and spends more than 5 tax years outside the UK they will at that point lose their deemed domicile status for tax purposes.  There will be a consultation on whether split years of UK residence will count.


The reforms represent a fundamental change in how individuals are taxed in the UK.  As the proposals are subject to consultations it is currently difficult to undertake planning with any degree of certainty.  However, it appears that there will continue to be advantages in settling offshore trusts and in taking other measures in order to limit the UK tax liability for those either leaving or coming to the UK.  We recommend that advice is obtained as advance planning will be even more necessary than before and of course all current arrangements should be kept under review.   

For more information please contact Jemma Lascelles, Associate in the Private Wealth team at or call 01392 687542.