Domiciled and UK citizenship questions

Hi everyone,

I understand the very basic layman's term/ definition of domiciled vs resident in the UK to be "where your heart is" vs "where you live".

If one is to obtain UK citizenship and retain US citizenship, does that change their status from resident to domiciled?

Additionally, if one is to buy a house in the UK, does that change resident  status to domiciled?

Piggybacking this question then, would it be wise to avoid applying for UK citizenship until after remitting funds from the US for a down payment on a house?

I do have a UK tax advisor and will be posing the same questions to her when she gets back from holiday, but I thought I'd ask the unofficial experts here for their opinion

Many thanks for any ideas!

Hi everyone,

I understand the very basic layman's term/ definition of domiciled vs resident in the UK to be "where your heart is" vs "where you live".

If one is to obtain UK citizenship and retain US citizenship, does that change their status from resident to domiciled?

Additionally, if one is to buy a house in the UK, does that change resident  status to domiciled?

Piggybacking this question then, would it be wise to avoid applying for UK citizenship until after remitting funds from the US for a down payment on a house?

I do have a UK tax advisor and will be posing the same questions to her when she gets back from holiday, but I thought I'd ask the unofficial experts here for their opinion

Many thanks for any ideas!

In general domiciled is where your family ties are strongest, and/or where your financial ties are strongest.  Below is a link where you can read a lot more about it.  Although we were both born and have worked in the UK plus I will be due UK SS plus small private pensions in due course, I expect to be domiciled in the USA for tax purposes when we become dual residents in a few years.  The reason for us will be that the vast majority of our income is from US private pensions and US IRA's, plus both our children live in the USA, and we were both Naturalized US citizens in 1998.

http://www.hmrc.gov.uk/international/domicile.htm

Page 16 in this booklet has a good flowchart you can use to determine country of domicile

http://www.hmrc.gov.uk/cnr/hmrc6.pdf

I'll stay out of this one, it's toooo tricky.

Two questions:
1) Where was your father born?
2) Where on this Earth would you like to die?   (This is a serious question.)

Domicile, in the UK, impacts your tax filing status, capital gains tax, and Inheritance Tax. In reality, citizenship plays little part in determining your domicile under UK law, but it could be a contributing factor. Owning a house in the UK does not alter your domicile, but again, it could be a contributing factor. Reading between the lines, I would judge that your main concern is (or should be) Inheritance Tax.

You are wise to be investigating this. The UK is currently reviewing IHT and domicile. I'm not sure of the status of the change.

You may find, in addition to the links given by durhamlad, the following to be of interest:

http://www.hmrc.gov.uk/manuals/rdrmmanual/RDRM22300.htm

http://www.hmrc.gov.uk/manuals/rdrmmanual/RDRM22310.htm

http://www.hmrc.gov.uk/manuals/rdrmmanual/RDRM22320.htm

http://www.hmrc.gov.uk/manuals/rdrmmanual/RDRM24030.htm

Edited to add 3rd link

Thanks so much durhamlad and theOAP for your excellent links and thoughts.  Thankfully, I am not worried about inheritance issues since we have no kids!  It's really more about being taxed by the UK on the USD I bring over for the down payment; from what I understand, if I am considered to be UK domiciled, I will have a larger tax liability to the UK on the money remitted to the UK than if I am considered to be resident only.  However- I am just gleaning this from the HMRC flow charts, etc so perhaps I am mistaken?  Thanks again for any insight!