Non-domiciled

A non-domiciled person – sometimes called a ‘non-dom’ – is a person who is living in the UK, but considers their permanent home to not be in the UK. Non-domiciled residents can benefit from certain tax advantages.

If you need to work out your domicile, it’s usually the country your dad considered his permanent home when you were born. However, be aware that this may have changed if you moved abroad and didn’t intend to return.

How do I know if I’ll pay UK tax as a non-domiciled person?

As a non-dom, you might not need to pay UK tax on your foreign income or gains. This is only if both of the following apply to you

  • Your foreign income and gains are less than £2,000 in the tax year
  • And you don’t bring them into the UK (such as transferring into a UK bank account)

If this applies to you, you don’t need to do anything regarding UK tax.

If your foreign income is more than £2,000

When you make more than £2,000, then you must report this income/gains to HMRC. You do this via Self Assessment and pay tax on it. You’re then left with a choice. You can either pay UK tax on this income, or you can claim the ‘remittance basis.’

The remittance basis is when you don’t pay UK taxes on earnings from abroad unless you transfer that money into a UK bank account. That means you choose be taxed only on whatever UK income and gains you make, and the foreign income and gains you bring back to the UK.

Although this is a tax advantage, it’s worth noting that if you decide to do this, you’ll:

  • Lose your tax-free allowances for Income Tax and Capital Gains Tax
  • Have to pay an annual charge to maintain your non-domiciled status (starting at £30,000 for non-doms who’ve been here for at least 7 of the previous 9 tax years).

However, the benefit of these two options is that neither is set in stone. For example, one year it may be more tax-efficient for you to pay tax on your foreign income or gains. This is instead of claiming the remittance basis.

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