ACCA Advanced Taxation (ATX) Practice Exam

What triggers a non-UK domiciled individual to be deemed UK domiciled for tax purposes?

1. Living in the UK for 10 years

2. Being a long-term resident for 15 of the last 20 years

3. Acquiring property in the UK

4. Working in the UK for 5 years

The correct answer is: Being a long-term resident for 15 of the last 20 years

A non-UK domiciled individual is deemed UK domiciled for tax purposes if they have been a long-term resident in the UK, specifically if they have been resident in the UK for 15 out of the last 20 tax years. This rule was introduced as part of the UK's tax residence changes, aiming to establish a clear threshold that links tax residency and deemed domicile status. The rationale behind this criterion is to ensure that individuals who have made the UK their primary residence over a significant period contribute to the tax system as if they were domiciled in the UK. The 15 out of 20 years test provides clear guidelines for individuals who may have begun their lives abroad but established significant ties to the UK over time. The other options do not meet the requirements set forth by HMRC concerning deemed domicile. Living in the UK for a period of 10 years is insufficient for deemed domicile status, as is simply acquiring property or working in the UK. These activities alone do not establish the prolonged residency necessary to influence the individual's domicile status for tax purposes.