Guides · Residency and domicile

Tax residency vs domicile

Tax residency is the country that has the right to tax your income in a given year. It is determined by where you actually live, by tests that look at days present, ties, and habitual abode. Domicile is a much older common-law concept about your permanent home — and it usually only matters for inheritance tax. The two are independent. You can be tax-resident in one country and domiciled in another.

Why it matters

A surprising amount of confusion in personal finance comes from mixing up two questions:

  1. Which country taxes my salary this year? — answered by tax residency.
  2. Which country taxes my estate when I die? — answered by domicile (in the UK), or by citizenship and residency tests (in the US, via the unified estate and gift tax regime).

They are independent. An American living in London is:

  • US citizen — taxed on worldwide income for life, regardless of where they live, with a foreign-earned-income exclusion and a foreign tax credit to mitigate double taxation.
  • UK tax resident — taxed on UK-source income, and on worldwide income if they meet the Statutory Residence Test.
  • Potentially UK domiciled — depending on where they were born and where their permanent home is, the UK may treat their worldwide estate as within scope of Inheritance Tax.

The TaxMetria calculator only addresses (a) — tax residency — and only for two jurisdictions. It is a take-home-pay tool, not a residency-planning tool.

United States — residency

US income tax residency is unusually broad. You are a US tax resident if any of these is true:

  • You are a US citizen, wherever you live. Citizenship-based taxation is unique to the US and Eritrea.
  • You are a lawful permanent resident (green card holder) — the "green card test" in IRC §7701(b)(1)(A)(i).
  • You pass the substantial presence test — you were physically present in the US for at least 31 days in the current year, and 183 days across the current year plus one-third of the days in the previous year plus one-sixth of the days in the year before that.

The US taxes its residents and citizens on worldwide income. The Foreign Earned Income Exclusion (FEIE, currently $130,000 for tax year 2026 per Rev. Proc. 2025-32) lets a qualifying citizen exclude some earned income if they live abroad, but unearned income (rents, dividends, capital gains) is still taxed. The Foreign Tax Credit offsets US tax on income that was also taxed by another country.

The substantial-presence test is mechanical. The closer-connection exception lets a non-immigrant who would otherwise pass the test stay non-resident by filing Form 8840 and showing stronger ties to another country.

United Kingdom — residency

UK residency is governed by the Statutory Residence Test (SRT), introduced in 2013. The SRT has three tiers:

  1. Automatic UK resident — you spent 183 or more days in the UK in the tax year, or your only home was in the UK for 91+ days and you were present for at least 30 days in that tax year.
  2. Automatic non-resident — you spent fewer than 16 days in the UK (if you were resident in the previous tax year) or fewer than 46 days (if you were not).
  3. Sufficient ties test — if you fall between the two, you are resident if you have enough UK "ties" (family, accommodation, work, 90-day, country). The more ties, the fewer days it takes to tip you into resident status.

The UK taxes residents on worldwide income, but there's no equivalent of the FEIE. Instead, the UK gives a remittance basis for non-domiciled residents who bring foreign income to the UK only when they choose to — but the remittance basis has become increasingly expensive (the remittance basis charge for long-term residents is £30,000 or £60,000 per year).

Domicile (UK concept, briefly)

Domicile is a common-law concept about your permanent home. You acquire a domicile of origin at birth (typically your father's, historically). You can change it by leaving and settling permanently elsewhere — but the test is harder than residency. Many people change tax residency without ever changing domicile.

Why it matters in the UK: Inheritance Tax (40% above the £325,000 nil-rate band) applies to the worldwide estate of someone who is domiciled in the UK. A non-domiciled resident is only charged IHT on UK-situs assets. From April 2025, long-term residents (10+ years) become "deemed domiciled" for IHT purposes regardless of their actual domicile.

The US has no equivalent concept of domicile for inheritance tax. US estate tax uses citizenship and domicile together — a US citizen's worldwide estate is taxed regardless of where they live, with a unified credit (around $13.99 million for 2026).

Treaties and tie-breakers

When two countries both claim you as resident (and you have meaningful presence in both), the US-UK Double Taxation Convention has a tie-breaker. In order, it looks at:

  1. Permanent home — where you have a home available to you.
  2. Center of vital interests — personal and economic ties.
  3. Habitual abode — where you spend more days.
  4. Nationality — citizenship.
  5. If none of the above resolve it, by mutual agreement between the two countries' competent authorities.

Most people resolve at step 3 — habitual abode is usually unambiguous. If you genuinely split your year between two countries, the treaty (and competent-authority process) decides.

What the calculator models

TaxMetria's calculator assumes:

  • US — you are a US tax resident (citizen, green card holder, or substantial-presence test passed). The FEIE and FTC are not modeled; the calculator assumes full taxation of worldwide income on the US side. Foreign-earned income scenarios are out of scope.
  • UK — you are UK-resident under the SRT, domiciled in the UK for IHT purposes (the default). Worldwide income is taxed. The remittance basis is not modeled.

If you are a non-resident in either country, the calculator's output is not for you. Use the appropriate primary sources instead — the IRS has a dedicated international taxpayers section, and HMRC publishes guidance for foreign income on GOV.UK.