Domicile (IHT)


The Domicile Status of an Individual (IHT)

When it comes to overseas aspects of tax, an individual’s DOMICILE status is crucial for INHERITANCE TAX purposes.

The concept of domicile is based on an individual’s PERMANENT HOME. It is different from the concept of NATIONALITY or RESIDENCE.

An individual can only have ONE domicile at any one time.


Deemed Domicile (IHT)

There are THREE scenarios for INHERITANCE TAX purposes when an individual can be DEEMED DOMICILE.

UK DOMICILED LEAVING THE UK

An individual who is leaving the UK retains their UK DOMICILE for INHERITANCE TAX purposes for 3 YEARS after leaving the UK.

LONG TERM RESIDENTS

An individual is DEEMED to be UK DOMICILED in a tax year if he/she has been UK RESIDENT for 15 OF THE PREVIOUS 20 TAX YEARS.

EXCEPTION: Tax laws changed from 6 April 2017. If a long-term resident has NOT been resident in any tax year since 5 April 2017, then they will NOT be DEEMED DOMICILED.

FORMERLY DOMICILED RESIDENTS

An individual is DEEMED DOMICILED in a tax year if:

  • born in the UK, AND
  • DOMICILE OF ORIGIN in the UK, AND
  • UK RESIDENT in that tax year.

The Impact of UK Domicile Status for Inheritance Tax

UK DOMICILED or DEEMED UK DOMICILEDNON – UK DOMICILED
INHERITANCE TAX CHARGED ON TRANSFERS OF WORLDWIDE ASSETSINHERITANCE TAX CHARGED ON TRANSFER OF UK ASSETS ONLY