HMRC has released its policy paper on the new domicile rules due to come into effect in April 2017. Whereas previously, a non-UK domiciled person would have to be resident in the UK for at least 17 out of the last 20 years, the new rules reduce this to 15 out of the last 20 years.
The new rules also affect people moving back to the UK, if they originally had a UK domicile but moved away and adopted a different domicile.
For inheritance tax purposes, having a UK domicile (i.e. Scotland, Northern Ireland or England & Wales) means their worldwide assets are subject to UK inheritance tax. It also has an impact on capital gains tax and income tax.
But it is not all bad news - sometimes it can be advantageous to have a UK domicile, and it is possible to make en election. For example, the non-UK domiciled surviving spouse or civil partner of a UK domiciled deceased person might want to make an election to prevent inheritance tax being charged on their inheritance (otherwise the spouse exemption would not be available).
As always, specialist legal and tax advice should be sought before navigating the complexities of domicile and taxation.
The main impact will be on non-UK domiciled individuals who have been resident in the UK for 15 out of the last 20 years and who currently use the remittance basis of taxation