I am intending to buy a property in Spain and retire there. Can you explain to me what I need to do to be treated as a non-UK resident and how I can establish my domicile in Spain?
The terms residence and ordinary residence are not defined in the Taxes Acts and are based largely on court rulings.
To be regarded as resident in the UK, you must normally be physically present in the country at some time in the tax year. You will always be resident if you are here for 183 days or more in the tax year. There are no exceptions to this.
You count the total number of days you spend in the UK. It does not matter if you come and go several times or if you are here for one stay of 183 days or more. If you are here for less than 183 days, you may still be treated as resident for the year under other tests.
The normal rule is that days of arrival in and departure from the UK are ignored in counting the days spent in the UK in all the various cases where calculations have to be made to determine your residence position.
If you are resident in the UK year after year, you are treated as ordinarily resident here. You may be resident but not ordinarily resident in the UK for a tax year if, for example, you normally live outside the UK but are in this country for 183 days or more in the year. Or you may be ordinarily resident but not resident for a tax year if, for example, you usually live in the UK but have gone abroad for a long holiday and do not set foot in the UK during that year.
It is possible to be resident or ordinarily resident in both the UK and some other country or countries at the same time. If you are resident or ordinarily resident in another country, this does not mean that you cannot also be resident or ordinarily resident in the UK. However, where you are resident both in the UK and a country with which the UK has a double-taxation agreement, there may be special provisions in the agreement for treating you as a resident of only one of the countries for the purposes of the agreement.
If you go abroad permanently – as is your intention – you will be treated as remaining resident and ordinarily resident if your visits to the UK average 91 days or more a year.
Any days spent in the UK because of exceptional circumstances beyond your control, for example, the illness of yourself or your immediate family, are not normally counted for the purposes of averaging your visits.
If you claim that you are no longer resident and ordinarily resident in the UK, the Inland Revenue may ask you to provide some evidence that you have left the UK permanently or are to live outside the UK for three years or more.
This evidence might be, for example, that you have taken steps to acquire accommodation abroad to live in as a permanent home or, if you continue to have property in the UK for your use, the reason is consistent with your stated aim of living abroad permanently or for three years or more.
If you have left the UK permanently or for at least three years, you will be treated as not resident and not ordinarily resident from the day after the date of your departure provided that:
Your absence from the UK has covered at least a whole tax year and
Your visits to the UK since leaving:
– have totalled less than 183 days in any tax year and
– have averaged less than 91 days a tax year.
Domicile is a general law concept. Broadly speaking, you are domiciled in the country where you have your permanent home. Domicile is distinct from nationality or residence. You can only have one domicile at any given time.
You normally acquire a domicile of origin from your father when you are born. It need not be the country in which you are born. For example, if you are born in France while your father is working there but his permanent home is in the UK, your domicile of origin is in the UK.
Until you have the legal capacity to change it, your domicile will follow that of the person on whom you are legally dependent. If the domicile of that person changes, you automatically acquire the same domicile (a domicile of dependency) in place of your domicile of origin.
You have the legal capacity to acquire a new domicile (a domicile of choice) when you reach age 16. To do so, you must broadly leave your current country of domicile and settle in another country.
You need to provide strong evidence that you intend to live there permanently or indefinitely. Living in another country for a long time, although an important factor, is not enough in itself to prove you have acquired a new domicile.