IHTM13001 - Domicile: Introduction

The law of domicile is of fundamental importance to IHT.

Firstly, as part of the overall legal framework within which the Act applies, e.g. it will determine the relevant (UK) rule for the succession to personal (movable) property, wherever situate, and thus help establish “who gets what”, and if to a spouse or civil partner ( IHTM11032) the extent to which a relevant transfer is exempt.

Secondly, as one of the conditions for the limitation of the territorial scope of IHT (excluded property - see IHTM04000 generally). We are interested principally in the domicile of transferors/deceased for foreign free estate and the domicile of settlors in relation to foreign settled property, whether discretionary or fixed interest.

Domicile is also one of the conditions for leaving the value of non-sterling bank accounts ( IHTM04380) in the UK out of account so the subject is not exclusively concerned with foreign property.

Thirdly, as part of protective and anti-avoidance legislation

spouse or civil partner exemption may be limited if the recipient is domiciled outside the UK ( IHTM13031) long term residents of the UK and those who have emigrated recently may be treated as being domiciled in the UK for the purposes of IHT even though they have a domicile outside the UK under general law ( IHTM13024)

Lastly, domicile is relevant to the application of double taxation conventions ( IHTM27161). In particular the removal of property from the charge to IHT (again including property in the UK) or the giving of a tax credit will depend upon the “fiscal” domicile, by which we mean the domicile that applies for the purposes of the convention. The deeming provisions ( IHTM13024) above will also be relevant in this context, i.e. applying the convention, except in relation to France, Italy, India & Pakistan.