The TACS Partnership highlights some potential inheritance tax traps relating to domicile.
Non-UK domicile status can be valuable in terms of sheltering an individual’s estate from IHT. In broad terms, UK domiciled individuals are liable to IHT on their worldwide estate; non-UK domiciled individuals are liable on their UK situs assets. In the case of settlement property, it is generally the settlor’s domicile at the time the settlement is created, together with the situs of the assets, which determines the scope of IHT.
Domicile is a matter of general law. However, there is also ‘deemed’ domicile for IHT purposes in certain circumstances. Furthermore, an individual may be treated as domiciled in the UK (or elsewhere) under the terms of a double tax treaty and taxed based on treaty domicile. Although a person is described in the IHT legislation and in this
