Inheritance tax domicile

Published: 29 Aug 2013

Updated: 29 Aug 2013


Written by Ray Coman


The scope of inheritance tax is affected by domicile. UK domiciled individuals are liable to inheritance tax on their worldwide assets, whereas non-UK domiciled individuals are only liable to their assets situated in the UK. A person is treated as domiciled in the UK if resident for income tax purposes in the UK for 17 out of the past 20 years. A person must be non-domiciled in the UK for three years before being treated as no longer UK domiciled for inheritance tax purposes.


The exemption for transfers of assets between spouses is restricted to the nil rate band (currently £325,000) where the recipient spouse is not domiciled. Prior to 6 April 2013, the cap was set at a lower limit of £55,000. The restriction is introduced to prevent overseas assets being transferred to a non-domiciled spouse and therefore escaping UK inheritance tax.


Whilst the above provides a general overview of the subject, individual circumstances must be taken into account and the interaction of inheritance tax with other tax should be considered. We would be pleased to help tailor a plan to minimise your inheritance tax. Please contact us to discuss if you would like advice in this area.

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