Your Domicile

You can change your domicile but it is very hard to do so and for most people, their domicile will never change.

Your domicile is your permanent home. Consider a British contractor who is working in assorted European countries. Even if this person has no family in the UK, he will probably still count as having a British Domicile. You have to set up a long term permanent attachment to another country in order to gain a Domicile there and thus to lose your British Domicile. If you are contracting around, moving from one city to another then you cannot establish an alternative Domicile and thus you will continue to keep the British one.

Fortunately, for our purposes, this is not such a big deal. When considering your libility to UK tax on the money that you earn from contract work overseas, the Inland Revenue looks at your Residence and Ordinary Residence. It is much easier to move those out of the UK and so retaining a British Domicile is not a problem. It does affect your liability to tax on other income and capital gains but I am not attempting to consider those matters here.

I can imagine two ways in which a British contractor could change Domicile. One might be to settle in a particular city on a long term basis. For example, a banking specialist might settle in Frankfurt and work there for several different clients. Then it would be possible to establish sufficient links to gain a German Domicile. Another might be to purchase property in say Spain and make that your default location when not working on site. So, you would go there between contracts or at Christmas etc.


Links
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UK Tax UK Tax while working overseas
Tax man! The official site