ACCA Advanced Taxation (ATX) Practice Exam

Under what circumstances is a non-UK domiciled individual deemed to be UK domiciled for income tax and capital gains tax purposes?

1. Resident for 10 out of the last 15 tax years

2. Never had a UK residence

3. Resident for 15 of the last 20 tax years and has been UK resident after April 2017

4. Only if they are born in the UK

The correct answer is: Resident for 15 of the last 20 tax years and has been UK resident after April 2017

A non-UK domiciled individual is deemed to be UK domiciled for income tax and capital gains tax purposes if they have been a UK resident for 15 of the last 20 tax years and have been UK resident after April 2017. This means that after a certain period of residency, the rules acknowledge the individual’s established ties to the UK, leading to a taxation status similar to that of those who are domiciled in the UK. This particular rule reflects the intention to tax individuals who have spent a significant amount of time living in the UK, thus indicating their integration into UK society and economy. Being resident after April 2017 further solidifies the requirement, as it establishes a clear cutoff that aligns with the current legislation and thresholds surrounding domicile and residency. In contrast, options that suggest never having had a UK residence or being born in the UK do not align with the criteria established for deeming domicile for tax purposes; residency and the length of that residency are the pivotal factors in determining tax implications. Moreover, being resident for 10 out of the last 15 tax years does not meet the stricter criteria necessary for a non-UK domiciled individual to be classified as UK domiciled. It is all about establishing a substantive connection