Domicile of choice - getting an opinion

[Oswulf]

I've been living in a country in Asia now for 20 years, cut most ties with the UK, and hope I've acquired a new domicile of choice. However, given that there's potentially a lot of inheritance tax to be avoided, I'd like to get a professional opinion on whether I've done enough. Has anyone done this? And if so, who did they use, and how was the experience?

Thanks

[servodude]

I've been living in a country in Asia now for 20 years, cut most ties with the UK, and hope I've acquired a new domicile of choice. However, given that there's potentially a lot of inheritance tax to be avoided, I'd like to get a professional opinion on whether I've done enough. Has anyone done this? And if so, who did they use, and how was the experience?

Thanks

The first thing I was advised to do was have citizenship of somewhere else; there's a pretty easy claim if all you are is British

[Golam]

Speak with a lawyer in the country of your domicile of choice so as to determine that country's laws regarding domicile. A preliminary web search should aid with determination. Such laws vary from country to country. So that is what I did, within Europe, and it worked for me.

[Oswulf]

The first thing I was advised to do was have citizenship of somewhere else; there's a pretty easy claim if all you are is British

It's not that straightforward. To have a domicile of choice one has to live in a specific country. Buying citizenship of somewhere I don't live doesn't help. And the country where I live has no path to citizenship available to me.

[Oswulf]

Speak with a lawyer in the country of your domicile of choice so as to determine that country's laws regarding domicile.

Domicile is very much an English legal concept. I'm not sure if there are any other countries which even have this concept.

What matters here is HMRC's interpretation of domicile. (Well, technically it's the courts, but it'll be HMRC that my estate has to deal with.) The opinion of the country where I live on such matters is irrelevant. But thanks for trying to help.

[Lootman]

Speak with a lawyer in the country of your domicile of choice so as to determine that country's laws regarding domicile.

Isn't it a problem that many countries do not have a concept of domicile at all? At least not in tax terms? From what I have seen most nations tax based on residency although some, notably the US, also tax by citizenship. Domicile is a third category that AFAIK is fairly rare, and unique to the UK and maybe some former British colonies?

As such a local lawyer or court may have no knowledge or opinion about your domicile. The jurisdiction that matters is the UK and it is the UK tax authority that you (or your executor) would have to convince about you having lost UK domicile.

If I were to permanently leave the UK I would cut all ties, get a passport of my new country and not renew my UK passport. I would maintain no financial accounts or assets in the UK. I would also ensure that my Will is from the new country and that probate happens there. In such a situation I do not see how the UK authorities could impose themselves upon that probate nor, for that matter, how the UK government would even know of your demise. In the vast majority of cases the issue would quite simply not arise, I would have thought, and your assets would be distributed locally according to your Will and local law.

[Steveam]

I have a friend in Thailand who has been/is exploring this very issue. He’s finding the whole thing rather difficult as he has no obvious route to citizenship so wants to keep his U.K. citizenship and passport. He also receives a (reduced) U.K. state pension. Other ties are being/have been cut.

Best wishes,

Steve

[bluedonkey]

You need very expert and expensive advice for this. It will also be extremely disruptive personally.

[Lootman]

I have a friend in Thailand who has been/is exploring this very issue. He’s finding the whole thing rather difficult as he has no obvious route to citizenship so wants to keep his U.K. citizenship and passport. He also receives a (reduced) U.K. state pension. Other ties are being/have been cut.

I would have thought that if someone has only a UK passport, renewing it each time it expires, then they would have a tough time arguing that they had lost UK domicile whilst traveling on that passport and enjoying the power and protection of HMG.

Another thought concerns marriage. If a British expat moves to Thailand and marries a local woman, then doesn't the status of that union affect the situation? So if your friend is married and they hold all assets jointly, then all their assets will accrue to his wife upon his death. I can easily imagine that local law would seek to protect that widow from claims by foreign creditors and third parties under foreign laws. I can further imagine a local court not upholding any such foreign claims.

It is a bit of an anomaly that there is no IHT between spouses upon the first death unless the surviving spouse is a non-dom. I thought at one point that the law was going to change so that there is no IHT for non-dom spouses either but AFAIK the anomaly still exists.

[Golam]

Speak with a lawyer in the country of your domicile of choice so as to determine that country's laws regarding domicile.

Domicile is very much an English legal concept. I'm not sure if there are any other countries which even have this concept.

What matters here is HMRC's interpretation of domicile. (Well, technically it's the courts, but it'll be HMRC that my estate has to deal with.) The opinion of the country where I live on such matters is irrelevant. But thanks for trying to help.

Other countries do have the concept of domicile.

Determine the taxation regime in the country of your proposed domicile. If favorable then move your estate there post resolution. . Easier said than done but can be done.

[RockRabbit]

I've been living in a country in Asia now for 20 years, cut most ties with the UK, and hope I've acquired a new domicile of choice. However, given that there's potentially a lot of inheritance tax to be avoided, I'd like to get a professional opinion on whether I've done enough. Has anyone done this? And if so, who did they use, and how was the experience?

Thanks

These are the current HMRC conditions. If you are unsure, you will need a specialist UK tax lawyer to confirm whether or not you meet these conditions.

https://www.gov.uk/guidance/deemed-domicile-rules

[bluedonkey]

"If you were born in the UK and have a UK domicile of origin at birth, you can acquire a domicile of choice outside the UK under common law, if you’ve resided in another country or law territory with the intention of staying there permanently."

My bold. This is the bit to focus on. Requires a profound change in personal life as well as formal stuff like passports etc.

[jdepp]

I became UK non resident a few years back and might well try to go down domicile of choice route at later stage. I took paid advice from a couple of tax advisors who specialise in international tax (and domicile), although I had researched it at length myself before hand so this was more to confirm my understanding.
For domicile of choice I think it is something you can elect after 6 years, although with stringent criteria. Clearly you need to understand IHT in your new place of domicile, or tax residency.
Also worth thinking about the labour plans for abolition of domicile which given you are out of UK for 20 years you would satisfy so the problem might naturally be solved.
There are lots of online resources so I would use those as starting point, I hate paying advisors to confuse me, much prefer them to confirm my understanding and London rates can be very expensive.

[scrumpyjack]

If I were to permanently leave the UK I would cut all ties, get a passport of my new country and not renew my UK passport. I would maintain no financial accounts or assets in the UK. I would also ensure that my Will is from the new country and that probate happens there. In such a situation I do not see how the UK authorities could impose themselves upon that probate nor, for that matter, how the UK government would even know of your demise. In the vast majority of cases the issue would quite simply not arise, I would have thought, and your assets would be distributed locally according to your Will and local law.

The two problems with that are that, if you receive the state pension either your executor will have to notify HMRC of your death or, fraudulently, continue to receive the state pension. Secondly it is your executor who will have to decide whether to ignore the UK and any possible UK tax liabilities, not yourself. He/she may not wish to take the risk?

[Lootman]

If I were to permanently leave the UK I would cut all ties, get a passport of my new country and not renew my UK passport. I would maintain no financial accounts or assets in the UK. I would also ensure that my Will is from the new country and that probate happens there. In such a situation I do not see how the UK authorities could impose themselves upon that probate nor, for that matter, how the UK government would even know of your demise. In the vast majority of cases the issue would quite simply not arise, I would have thought, and your assets would be distributed locally according to your Will and local law.

The two problems with that are that, if you receive the state pension either your executor will have to notify HMRC of your death or, fraudulently, continue to receive the state pension. Secondly it is your executor who will have to decide whether to ignore the UK and any possible UK tax liabilities, not yourself. He/she may not wish to take the risk?

If I were planning to do this then I might take these two steps:

1) One can presumably always renounce getting a state pension whilst alive, if that were the only reason your death would be notified to a UK authority.

2) Assuming that there is an executor. If all assets are jointly owned or gifted prior to death, most likely no executor would be needed and any named executor could renounce. Also although an executor can be held personally liable, when that executor is someone beyond UK law that risk surely becomes less clear. Local law would trump UK law in that jurisdiction and any claim from a UK creditor might be tossed.