What is non-dom status in the UK?

THERE are many different terms and phrases used in the UK tax system, one of which is non-dom, or non-domiciled, status.

An individual's tax treatment is decided by their domicile status and, while there have been changes to the rules over the years, a non-dom status still remains as an attractive proposition.

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What is non-dom status in the UK?

Non-dom status is given to UK residents who declare their permanent home - or domicile - is in another country.

Individuals with non-domicile status do not have to pay UK tax on income from foreign investments.

They are also exempt from paying UK tax on rental payments for property overseas, and UK inheritance tax.

Around five million people living in the UK could claim non-dom status, but are unable to secure any tax advantage due to their income and gains solely being in the UK.

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Can you be a non-dom British citizen?

Non-doms can live in the UK all year round but the status is only available to British residents who claim that their domicile is elsewhere.

This means that most of their personal and financial interests are outside the UK.

UK residents who have their permanent home outside the UK may not have to pay UK tax on any foreign income.

Tax residence can be determined by the number of days you spend in the UK and if you spend 183 days or more in any tax year in the UK, you will be a UK resident.

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If you spend less than 183 days in the UK, you can also become a tax resident depending on a number of factors, such as having a family or accommodation in the UK without becoming a tax resident.

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How long can a non-dom stay in the UK?

Those with non-dom status can live in the UK for as long as 15 years and pay little or no tax.

Then, individuals that have been a UK resident for 15 years of the previous 20 tax years will be deemed UK domiciled for all tax purposes.

How do I qualify for non-dom status?

You do not pay UK tax on your foreign income or gains if:

• they're less than £2,000 in the tax year
• you do not bring them into the UK

If your foreign income or gains is more than £2,000, you must report it in a

This is where you will either pay UK tax on them, or claim on the non-dom remittance basis.

If claiming on the remittance basis, you will only pay UK tax on income or gains that you bring into the UK.

You will, however, lose tax-free allowances for income and capital gains tax.

According to the , if you work in the UK and abroad, you qualify for non-dom status if:

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• your income from your overseas job is less than £10,000
• your other foreign income (such as bank interest) is less than £100
• all your foreign income has been subject to foreign tax (even if you did not have to pay, for example because of a tax-free allowance)
• your combined UK and foreign income is within the band for basic rate

If you qualify for non-dom status, you will not need to do anything to claim on foreign income or gains.