united-kingdom tax-law
Does Mrs Sunak have any choice in the matter?
<p>The Indian wife of the UK Chancellor of the Exchequer has now said that while she will in future pay UK tax on her foreign income, she will retain her non-domiciled status.</p>
<p>Is there any choice here? The question of domicile, as I understand it is not one of form but of fact. Domicile, as I understand it, is a common-law status which is determined by the circumstances. It is not something for which one can apply, or discard when no longer needed.</p>
<p>There are two types of domicile - domicile of origin (that with which one is born) and domicile of choice, determined by a multiplicity of one's life choices concerning where to live etc. And most importantly one's future intentions - as expressed in such things as what nationalities, residence statuses etc that one has acquired.</p>
<p>And presumably, if she now begins to file tax returns as a UK domiciled person, it will add to the evidence that she has lost her Indian domicile - will it not?</p>
<p>But having said that - I don't think she has said she will file domiciled returns - merely that she &quot;will pay UK tax on her overseas income&quot;. Anyone can pay more tax that they need pay - one can I assume voluntarily choose to do that.</p>

<h2>Tax law is complicated</h2>
<p>Being domiciled for tax purposes is different from residence or citizenship.</p>
<p>If you are <a href="https://www.gov.uk/tax-foreign-income/residence" rel="nofollow noreferrer">domiciled</a> in the UK then you <em>must</em> pay UK taxes on all your income.</p>
<p>If you are not domiciled (and Ms Murty isn’t), you can <em>choose</em> to pay UK taxes on all your income.</p>
<p>Why would you do that?</p>
<p>Well, according to <a href="https://www.bbc.com/news/business-61041926" rel="nofollow noreferrer">this</a> report, there is an old tax treaty between the UK and India that says that if you pay income tax in the UK, you can <em>choose</em> whether to pay inheritance tax in either the UK or India. And India abolished death duties. So, by paying tax in the UK now on income, she avoids much larger taxes on her assets when she dies.</p>
