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You inherit the domicile of your father, or your mother in certain circumstances. So if your father has a foreign domicile, you can inherit that foreign domicile from him, even if you were born in the UK and he is living in the UK, as long as you and he don't intend to stay here permanently.

It is also possible to lose your UK domicile if you permanently move abroad and make your home in another country, although proving this to HM Revenue & Customs is difficult.

The advantages of a non-dom status can be considerable for those with large amounts of investment income. Up until April 2008, all non-doms could avoid paying tax on earnings from overseas investments. But since then, you only enjoy this advantage for the first seven years that you live in the UK.

After that, you can opt to avoid paying tax on your offshore income, but you have to pay HMRC £30,000 for the privilege. This effectively means that for the first seven years you are in the UK, claiming non-dom status is worth doing regardless of how much you are earning offshore. But after that period, it is only worth doing if you are going to save more than £30,000 a year.

Non-doms are also allowed to avoid tax on overseas investment income if it does not exceed £2,000 a year, which experts say is likely to cover a large number of people with savings on deposit, given today's low interest rates. If this applies to you, it could be worth opting for an offshore account provided it pays a higher rate of interest than you can get onshore. But check that the compensation scheme offered by the regulator in the jurisdiction your offshore provider is based in is enough to cover you in the event the provider goes bust.

Non-dom status can also help cut your inheritance tax (IHT) bill, because you will only be liable for IHT on your UK assets and not those overseas. However, there is a potential trap for those looking to avoid IHT. If you have lived in this country for any part of 17 years in the last 20, you are deemed domiciled for IHT purposes.

"The well-advised take steps to avoid this, by ensuring their overseas assets are transferred into an offshore trust before they become deemed domiciled," Mr Warburton says.

If you were born in the UK, you are likely to start off with UK domicile and losing it is difficult. However, it may be possible, particularly where people retire to another country with no intention of returning to the UK. The law surrounding this area is complex, so get professional advice.

"You need to leave the UK and settle in a particular state overseas, and show you have made a permanent home over there. After three years it is possible to lose UK domicile, but it is very hard to do so," says Alex Henderson, a tax partner at PricewaterhouseCoopers. "Domicile is largely an accident of birth, so choose your parents wisely."

Q How do I become non-domiciled in the UK?
A Domicile is, in most situations, an accident of birth, rather than a choice. You inherit domicile from your parents, usually your father. If your father is not UK-domiciled when you are born and you don't intend to stay in the UK permanently, you may have a foreign domicile, too: domicile of origin.

Q Can I be a non-dom if I was born in the UK?
AYes. Being born here does not automatically mean that you are domiciled here. You might have been born here to a non-UK-domiciled father and then moved to another country. If you return here and are not planning to stay permanently, you will continue to be domiciled outside the UK.

Q What if I was born abroad, while parents were working overseas?
AYou will not qualify for non-dom status if your father remained domiciled in the UK while overseas.

Q Is domicile always dependent on my father's domicile?
ANo. If your parents divorce when you are a child and you are brought up by your mother you get her domicile. If your parents were not married at your birth, you also acquire her domicile.

Q Can I lose my domicile of origin?
AYes, but it is not easy. To do so you must leave your current country of domicile and settle in another country. You need to provide evidence that you intend to live there permanently or indefinitely. HMRC will take into account factors including intentions, permanent residence, business interests, social and family interests, and ownership of property.

Q What is the difference between ''domicile'' and ''residence''?
A Domicile is where you come from or where you intend to spend the rest of your life. Residence is an issue of where you physically are at a particular time. You become automatically resident in the UK if you spend 183 days here. You also become resident if you spend an average of 90 days a year here. When you are resident here you are liable for tax on UK earnings.

Q What tax can I avoid?
Income tax and capital gains tax on investments and other assets held overseas. You can also avoid inheritance tax on property held overseas, although you will be deemed UK-domiciled for IHT purposes if you are resident in the UK for any part of 17 years in the last 20. This can catch you after 15 years and two days in certain circumstances. Putting property into trust before this time has lapsed will help you avoid IHT.

Q How do I claim non-domiciled status?
A Tick the box on question 8 of your self-assessment tax return. By doing so, you will have more pages to fill in. HMRC may ask for further evidence.

Unfortunately, leveller's opinion stands for nothing against the Taxes Acts.