A person’s domicile is generally decided by their state of mind. Do they have a firm and settled intention to remain in a given country, or not? The answer to this question will often determine their domicile.
Much of the media reporting implies that the basis for Ms Murty being a non-domicilary is her Indian citizenship. In fact, citizenship is only one of many factors that evidence a person’s intention and therefore their domicile status.
Moreover, a person does not “claim” non-domiciled status as such. They either are or are not domiciled depending on all the evidence surrounding their intention. What they can do if they are non-domiciled is claim certain tax advantages, such as the “remittance basis” of taxation.
Whether or not the remittance basis is beneficial for a taxpayer will depend on their individual circumstances. For some, it is not worth the annual charge to benefit from this tax regime, whereas others will claim it to shield non-UK income and gains from UK tax (until, that is, such income or gains are brought to the UK, at which point they are taxable regardless of the remittance basis claim).
Another nuance that has been lost in much of the reporting lately is that Ms Murty will not lose her non-domiciled status when she reaches 15 years of residence in the UK. Instead (unless she forms that all-important intention to stay), she will become “deemed domiciled”, while retaining her original domicile outside the UK. This is an important distinction for a variety of tax and non-tax reasons.
In summary, a claim by a non-domiciled person for the remittance basis is entirely legitimate planning that has been available under UK tax law for many years (with some form of the remittance basis rules having been in place since 1914). Whilst there has been significant reform (notably to limit the availability of the remittance basis for 15 years of residence) and ongoing consultations, neither political party has shown much enthusiasm for abandoning the regime entirely, and it continues to be offered to internationally mobile people who may have assets around the world and ties to many different places.
Please contact Sarah Cormack if you have any queries in relation to domicile or deemed domiciled status in the UK.
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