To Domicile Or Not? Considerations For Making A UK Move

Leon Fernando Del Canto 17 June 2020


International executives need to use the current extraordinary times to re-assess their financial portfolios and examine where their time and investments would make most sense.

The author of the following article claims that the UK will, as lockdowns ease off and the UK arrives at some final reckoning over Brexit, be able to attract more high net worth individuals. From this moment, when the economic outlook is murky, the attractiveness of the UK to foreign HNW people might not be that easy to argue for. Much depends on whether government policy, business conditions and attractiveness of UK society remain in sync. That is a lot of “ifs”. The UK has squeezed the non-dom regime in recent years, tightened tax breaks for foreign investors, and some of the noises over Brexit haven’t always sounded attractive to those from abroad. The pandemic fight has arguably interfered with the ability of UK policymakers to put forward a consistent message. Much remains to be seen.

The article comes from Leon Fernando Del Canto, founder of Del Canto Chambers, the international law firm with a country focus on the UK, Spain, Qatar, Columbia and Mexico. The editors are pleased to share these views; they don't necessarily endorse all views of guest writers. To respond, email and

With lockdown restrictions easing and Brexit around the corner, the UK is set to see an influx of high net worth individuals flocking to London as the country’s European counterparts will pale in comparison to what the UK can offer financially. 

International executives are therefore considering how to use the current climate wisely: as a time to reflect on how to re-assess their financial portfolios and examine where their time and investments would make most sense – but this involves understanding the tax and legal implications associated with these decisions. 

London-based international residents wanting to re-assess their financial situation will be turning their attention to the EU Settlement Scheme (EUSS), which allows EU, EEA or Swiss citizens and their families to apply to acquire either settled or pre-settled status to continue living in the UK after 30 June 2021. To qualify for settled status under the EUSS scheme, an applicant must show residency in the UK for a continuous period of at least five years; showing under five years’ residence will mean qualifying for pre-settled status. 

Issues often arise for HNWIs when the automatic checks that examine records for the seven years predating the application show that their tax footprint doesn’t reflect their residence, which can cause real headaches for those wanting to make the most of the EUSS. HNW individuals and their advisors should be looking carefully at the tax ramifications where this scheme is concerned to ensure that they are compliant and able to benefit from it in the long term. 

"Residence" for the purpose of the scheme encompasses a broad definition; it requires physical presence in the UK for at least one day with no absence of over six months in any 12-month period. Automated checks will be conducted with HM Revenue & Customs and/or the Department for Work and Pensions; meanwhile, PAYE [Pay as You Earn] records evidence one month of residence with each record, and self-assessment tax returns are taken as evidence of residence for the 12-month period covered by each return. 

Where UK tax residency is concerned, HMRC provides a Statutory Residency Test (SRT) allowing people to work out the residence status for any given tax year. Each year is looked at separately and under UK rules it is perfectly possible to be resident in the UK one year but not the next. The SRT considers the amount of time spent (and, where relevant, worked) in the UK, as well as connections with the UK.

A person is considered resident if they have either: spent 183 or more days in the UK in the tax year; or when their only home is in the UK and it is owned, rented or lived in for at least 91 days in total – spending at least 30 days there in the tax year. Where a person’s tax liabilities are concerned, they must be understood in the context of UK Tax Law, as opposed to their continental tax law equivalents. 

Resident status is just one of three concepts. Another is known as “source”, which establishes where income profits are charged to tax. Finally, we have “domiciled”, which will make up the main focus of this article, because the non-domiciled regime - applicable to international residents in the UK - is the most beneficial and therefore encompasses the majority of those applying to the EUSS.  

Despite being one of the most complex tax regimes in Europe (which does not respond specifically to the tax treaty concept of residency, which most European practitioners are familiar with), most international executives seek this ‘domiciled’ status, of which there are three types: domicile of origin, domicile of choice and domicile of dependence. 

A non-domiciled (“non-dom”) is a UK resident whose permanent home or domicile is not in the UK. HMRC may deem someone to have a UK domicile for tax purposes in certain situations, for example if they were born in the UK and have a UK domicile of origin, even if they have subsequently lived elsewhere – upon returning to the UK, they will be deemed UK domiciled. However, deemed domiciled status can be lost if an individual leaves the UK and spends a minimum of six years as a non-UK resident during the previous 20 years. 

To establish the UK tax position of international monetary receipts of any type requires understanding not only the UK legal and tax rules but also the rules of the double tax treaty with the specific European country (i.e. where the national may have other interests).

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