What income are UK residents and UK domiciliaries taxed on?

UK residents and UK domiciliaries are taxed on their worldwide income as it arises. This means that they must report and pay taxes on income earned both within the UK and internationally. The taxation principle is based on the residency status of the individual, which broadens the scope of taxable income beyond just what is earned domestically.

Being a resident generally means that individual spends a significant amount of time in the UK, while being domiciled refers to the place that a person considers their permanent home. Therefore, when someone is classified as a UK resident and domiciliary, they are liable for taxes not only on UK income but also on foreign income, regardless of where it is earned, as soon as it is received or realized.

Understanding this framework is essential for calculating tax obligations and complying with the HM Revenue and Customs tax regulations. Income earned outside the UK is subject to UK tax laws, making it crucial for tax residents who may have substantial foreign investments or earnings to carefully manage and report their foreign income.