Domicile and residence Domicile is distinct from residence. Generally a person is domiciled in the country or state where they live permanently. An individual can be resident in one country and domiciled in another. UK tax liability can arise on a ‘remittance basis’ in respect of earnings from overseas employment remitted to the UK if the person is either resident but not ordinarily resident in the UK, or resident but not domiciled in the UK. From 6 April 2008, UK resident taxpayers who are non-domiciled will only be able to access the ‘remittance basis’ on payment of an annual charge of £30,000. The charge will apply where the individual has been UK resident for more than seven out of the past ten years, unless their unremitted foreign income or gains are less than £1,000. Where an individual decides not to use the ‘remittance basis’ (and not pay the annual tax charge) they will be taxed on all their worldwide income and gains whether or not they are remitted to the UK. Non-domiciled individuals, resident in the UK, using the ‘remittance basis’ will also lose their entitlement to claim personal income tax allowances, unless their unremitted foreign income or gains are less than £1,000. When determining UK residence for tax purposes current HM Revenue & Customs practice is to ignore days of arrival in and departure from the UK. On and after 6 April 2008, days of arrival and departure will be counted as days of presence in the UK for residence test purposes. This will bring the UK into line with international practice. The Government is currently seeking views on whether non-domiciles, UK tax resident for more than 10 years should "make a greater contribution" to paying UK tax. The consultation paper can be viewed at HM Treasury website and runs until 28 February 2008. Paul Tew, Pay Magazine Snowdrop provides a range of Payroll solutions that are fast, flexible and easy-to-use, to suit the many and varied needs of each organisation. To find out more about the software and services that we provide, please click here >>