Residence, Long-Term Residence and Domicile: what do they mean?

See the section “More detail on Residence” above for how tax residence is tested.

If a person ceases to be UK tax resident after 9/20 tax years, then they will not become long-term resident.

However, once a person satisfies the 10/20 test and becomes long-term resident, they will retain that status for:

• as long as they remain UK tax resident; and
• for a “tail period” of between 3 and 10 tax years after ceasing to be UK tax resident.

There is a separate test for those aged 20 or younger and also a transitional rule for some individuals who were non-UK domiciled on 30 October 2024. Both of these, together with the method for calculating the length of the “tail period” described above, are explained in our article here.

The impact of long-term residence

Subject to various exemptions and reliefs, inheritance tax is charged at a rate of 40% and is not only applicable on death. For example, it can apply to gifts in some situations.

More detail on domicile

Testing domicile

Unlike residence and long-term residence, there is no statutory test for domicile. Instead we must discern the tests from reported cases which makes it particularly important to take expert advice.

When thinking about domicile it is important to remember that:

• An individual can, under English law, only have a single domicile at any one time.
• An individual must always have a domicile (whereas it is technically possibly to be resident nowhere).
• Domicile focuses on jurisdiction. Whilst that can be a country, in federal systems such as the USA it can instead be a state or province.
• Every person is born with a domicile but this can change during their lifetime. When advising on domicile, it is necessary to look back at the whole of a person’s life to determine which domicile they began with and whether that has changed since. It is also necessary to look ahead at their future intentions.

Domicile of origin

The domicile acquired at birth is known as a “domicile of origin”. This can also be thought of as a person’s “default domicile” because it will apply unless and until any other form of domicile supplants it and can even revive at a later date after being so supplanted.

A child’s domicile of origin will usually be the domicile of their father at the time of their birth if their parents are married to each other. In other cases the child may take their mother’s domicile (such as if their father has died or their parents are unmarried).

Whilst a child’s domicile of origin will often be the jurisdiction in which they were born, this is not always the case and care must be taken to consider whether the relevant parent could have been domiciled somewhere else at the time of the birth (e.g. if they had only recently arrived in the country or were living there temporarily for work purposes).

A domicile of origin cannot be changed (unless the child is adopted) but can be replaced by either a “domicile of dependency” or a “domicile of choice”.

Domicile of dependency

A domicile of dependency will be acquired if the child’s relevant parent changes their own domicile whilst the child is under a certain age (usually 16).

For example, if a child is born in France to parents who have always lived in France then they will almost certainly begin life with a domicile of origin in France. However, if the parents move the family to California, USA, with an intention to emigrate permanently, the parents might acquire a domicile of choice in California (see below). If they did, this would change the child’s domicile as well if the child was under the age of 16 at the time. The child would acquire a domicile of dependency in California.

Prior to 1974 a married woman would also acquire a domicile of dependency if her husband’s domicile changed. Whilst this has not been the law for more than 50 years, it can still be relevant when considering the domicile of someone married before then.

Domicile of choice

Once a person has attained legal capacity (usually at the age of 16), they can no longer acquire a new domicile of dependency. Instead, they can acquire a domicile of choice. Any domicile of dependency acquired between birth and the age of legal capacity will convert into a domicile of choice at that date.

In order to acquire a domicile of choice, two key elements are required:

• The objective element: the person must move their primary home to the jurisdiction in question; and
• The subjective element: the person must intend to reside in that jurisdiction permanently or indefinitely.

The first of these is often straightforward to determine, although where an individual has multiple homes split between different jurisdictions it can require a more detailed factual investigation.

As to the second, subjective intention is inherently difficult to analyse. In practice HMRC consider a broad range of factors to try and divine intention from a person’s actions and words. Their position tends to be that, if a person’s primary home is in the UK (so they have satisfied the objective element of the test), that person will also have satisfied the subjective element unless they can point to a reasonably foreseeable (i.e. likely) and clearly defined event which will cause them to leave the UK. Simple examples would include intending to leave after retirement, or when one’s children finish school. Whilst there is some technical debate as to whether HMRC’s interpretation of the law is wholly correct on this point, it remains vitally important for any UK resident but non-UK domiciled individual to be clear as to the circumstances which would cause them to leave the UK.

Once acquired, a domicile of choice can be lost (referred to as “abandoned”) if both the objective and subjective elements of the test cease to be satisfied (i.e. a person moves their primary home from the jurisdiction and does not intend to return). In that situation the individual might either acquire a new domicile of choice somewhere else or, if they would otherwise be left without a domicile, their domicile of origin will revive.

The impact of domicile

Although the impact of domicile on UK tax has been greatly reduced since 6 April 2025, it is not entirely irrelevant. For example, it can still play a key role in the application of certain double tax treaties (the UK/US and UK/India inheritance tax treaties being prime examples) and a person’s historic domicile position may have a significant bearing on how structures such as trusts are taxed.

It is also important in a number of other areas of English law. For example:

• domicile will often be a crucial factor in determining which country’s (or countries’) succession laws apply to a person’s estate on death;
• certain types of claims against a person’s estate can only be made if the deceased was domiciled in England and Wales when they died; and
• domicile can impact matters such as the law applicable during a divorce.

How can we help?

We can provide detailed Legal Opinions to confirm a person’s residence, long-term residence and/or domicile status and also provide broader estate planning advice explaining how to structure one’s affairs so as to make best use of any given combination of these.

We also assist regularly with HMRC enquiries and voluntary disclosures in which residence, long-term residence and/or domicile play a key role.