Domicile is a legal concept distinct from residence and nationality. It broadly indicates the country a person regards as their permanent home — the one they intend to settle in indefinitely. Unlike residence, which can change from year to year, domicile is slow to acquire and slow to shed.

Domicile of origin

Everyone acquires a domicile at birth — usually the domicile of their father (or, where parents are unmarried, their mother). This is the domicile of origin, and it has a remarkable ability to revive: if a person abandons a later-acquired domicile without establishing a new one, the domicile of origin springs back.

Domicile of choice

A person can acquire a domicile of choice in a new country by taking up residence there with the intention of residing there permanently or indefinitely. Both elements — physical presence and settled intention — are required. Tax planning based on a claimed domicile of choice must be robust, because HMRC scrutinises such claims closely.

Why it matters

Domicile determines the scope of UK inheritance tax. A person domiciled in the UK is subject to IHT on their worldwide assets. A non-domiciliary is subject to IHT only on UK situs assets — a potentially significant difference for those with substantial foreign wealth. Domicile also affects the availability of the remittance basis for income tax and capital gains tax purposes.