Domicile, the old non-dom rules, and why they can still matter

The old UK tax rules often used the word domicile. From 6 April 2025, the main tax rules for non-doms changed significantly. The remittance basis was replaced for Income Tax and Capital Gains Tax, and IHT moved to a residence-based system.

That does not mean the old domicile rules can be ignored. They can still matter for earlier tax years, older planning, some trusts, some IHT transitional rules, and some double tax treaty points. It is therefore still useful to understand what domicile meant under the old rules.

The main point

Domicile was not the same as tax residence, nationality, citizenship or visa status. A person could live in the UK for many years and still have a non-UK domicile under the old rules. Equally, a person could be non-UK resident but still UK domiciled.

In broad terms, domicile meant the country or legal territory that was treated as a person’s permanent home. It was a long-term concept. It was not changed simply by moving house, working abroad, holding a passport, or saying that one day you might leave.

Everyone had one domicile

Under the old rules, every person had a domicile at all times. A person could not simply have no domicile. A person also could not normally have two domiciles at the same time for the same purpose.

There were three main ways in which domicile could arise.

Changing domicile was not easy

To acquire a new domicile by personal choice, two things were normally needed. First, the person had to live in the new country as an inhabitant, not just as a visitor. Secondly, the person had to intend to remain there permanently or indefinitely.

A temporary posting, a fixed-term work contract, a student placement, or a stay driven by a specific short-term purpose would not usually be enough on its own. The person’s intention had to be tested against the evidence.

Evidence could include where the person’s family lived, where they owned or rented homes, where they worked, where their investments and bank accounts were, where they expected to retire, where they were buried or wished to be buried, what their Will said, and whether they had cut ties with the previous country.

Statements of intention were relevant, but they were not conclusive. What a person did was usually more important than what they said.

Why domicile mattered before 6 April 2025

Before 6 April 2025, a UK resident person who was non-UK domiciled could sometimes use the remittance basis. In simple terms, this meant that certain foreign income and gains could be kept outside the UK and not taxed in the UK unless brought to the UK. The remittance basis had conditions, costs and reporting consequences, especially for long-term UK residents.

Domicile also mattered for IHT. Broadly, a UK domiciled person was within IHT on worldwide assets. A non-UK domiciled person was generally within IHT on UK assets, but foreign assets could be outside the UK IHT net, subject to detailed rules and anti-avoidance provisions.

These are broad statements only. UK residential property, UK assets held through structures, trusts, gifts with benefits retained, and other special rules could produce a different result.

The old deemed domicile rules

Under the old tax rules, a person could be treated as UK domiciled for tax even if their general law domicile was outside the UK. This was called deemed domicile. There are different types of deemed domicile.

From 2017/18 to 2024/25, a non-UK domiciled person could become deemed UK domiciled after being UK resident for 15 of the previous 20 tax years. For a continuously UK resident person, this usually meant from the 16th tax year of residence.

There were also special rules for some people born in the UK with a UK domicile of origin, who later acquired a non-UK domicile and then returned to the UK. These rules could treat them as UK domiciled for tax during UK residence, even where they intended to return overseas later; the terminology used for them is Formerly Domiciled Residents (FDRs).

A person may also elect to be UK deemed domiciled. The election is usually made by a non-dom surviving spouse in order to secure the full spouse exemption after the UK domiciled spouse died.

What changed from 6 April 2025

For Income Tax and Capital Gains Tax, the old remittance basis was replaced by a new four-year foreign income and gains regime. The new regime is based on residence history, not domicile. It is aimed at people who become UK tax resident after at least 10 tax years of non-UK residence.

If a person qualifies and makes the necessary claim, eligible foreign income and gains in the first four tax years of UK residence can be relieved from UK tax. If they do not qualify, the ordinary position is that UK residents are taxed on worldwide income and gains as they arise, subject to any reliefs and tax treaties.

For IHT, the old domicile and deemed domicile tests were replaced by long-term UK residence rules. A person can be a long-term UK resident if they have been UK resident for at least 10 of the previous 20 tax years. A long-term UK resident who leaves the UK can remain within the IHT net for a further period, generally between 3 and 10 tax years depending on their residence history.

Why the old rules can still matter

Domicile can still matter even after 6 April 2025. The most common reasons are:

The practical point is that the old facts still need to be preserved. A person’s old domicile position may need to be proved years later, especially in relation to trusts, estates or historical foreign income and gains.

A simple illustration

A person moved to the UK in 2018 for work, always intended to leave after their children completed school, kept their main family and business ties overseas, and did not plan to retire in the UK. Under the old rules, those facts may have supported a non-UK domicile. But the answer would still depend on all the evidence, not simply on what the person said.

From 6 April 2025, the same person’s current Income Tax, Capital Gains Tax and IHT position will mainly depend on the new residence-based rules. However, their old domicile position may still matter for pre-2025 tax years, historical remittances, or trusts set up before the rules changed.

Final point

Domicile has not disappeared from history. It no longer drives the main current income tax, capital gains tax and IHT rules in the same way from 6 April 2025, but it can still be relevant to older years, existing trusts, transitional IHT rules and some treaty issues. The right approach is to apply the new residence-based rules for current years, while keeping enough evidence to support the old domicile position where it still matters.

This article is provided for general information only. It does not constitute tax, legal or other professional advice, and should not be relied on as a substitute for specific advice based on your particular circumstances.