UK IHT Overseas Lose UK Domicile

Published / Last Updated on 17/06/2015

UK IHT Overseas Lose UK Domicile

You are UK Domicile of Origin if you were born in the UK to a UK Domiciled father.

You are UK Domicile of Choice if you have moved to the UK from overseas and have been living in the UK for at least 17 out of the last 20 years.

This means you are subject to UK Inheritance Tax on your Worldwide assets.  See our full explanation of domicile in the business and tax zone.

Losing UK Domicile of Origin Status

It is possible to lose your UK Domicile of Origin Status if you move overseas.  You can acquire a domicile of choice broadly speaking by moving overseas with the intention to live there permanently and sever ties with the United Kingdom. This would mean that you may not be subject to UK inheritance tax on Worldwide assets but only on UK assets

This is easier to disprove than prove. Things that demonstrate a change in domicile:

  • Demonstrate a long term, permanent intention to live overseas
  • Buying a house and disposing of all property in UK
  • Establishing a business or getting a job overseas
  • Marriage and children overseas and you acting as a permanent part of the community
  • Citizenship, passport or voting rights acquired
  • Valid overseas funeral arrangements
  • Breaking all ties with the UK and no, we do not mean you cannot come back and visit relatives
  • The onus of proof, as ever, with HM Revenue and Customs (HMRC) is on you or your estate.

Losing a Domicile of Choice Status

Quite simply, if you move from one country to another, even if you still stay outside the UK, you automatically lose your Domicile of Choice and are back to your Domicile of Origin (at birth) again. This means:

  • If you are British and you live in Spain for 30 years and have acquired a Domicile of Choice in Spain, if you then move to France, you have clearly demonstrated that Spain was not your permanent home as intended and therefore, why should HMRC now believe that France will be. You will have to go through all the time constraining long winded processes to be able to prove that France is in fact now your permanent place of home with no intention of leaving to avoid UK Inheritance Tax on Worldwide assets.
  • If you are a Foreign National and you live in UK for a period of time and become UK Domicile of Choice and then move away from the UK, you immediately lose your UK Domicile of Choice and would only be subject to UK Inheritance Tax laws on your UK assets, if you leave any assets or property in the UK.

For more help on how to lose UK domicile and plan for tax, contact us.

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