The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
A person not otherwise domiciled in the UK under the general law may be deemed to be domiciled for tax purposes. The concept of deemed domicile for income tax (IT) and capital gains tax (CGT) was introduced with effect from 6 April 2017. See the Deemed domicile for income tax and capital gains tax (2017/18 onwards) guidance note in the Personal Tax module. At the same time, the long-standing inheritance tax rule for deemed domicile, based on 17 out of 20 years’ residence in the UK, was amended.
There are now three separate rules that can apply deemed domiciled status for inheritance tax purposes, as follows:
the person was domiciled in the UK under general law at any point in the last three years
the person is a ‘formerly domiciled resident (FDR)’ (see below)
the person has been resident in the UK for at least 15 out of the last 20 tax years preceding the current one and for at least one of the four tax years ending with the current one
IHTA 1984, s 267(1); IHTM13024
The first rule attaches a deemed UK domicile to an individual who has left the UK and has taken sufficient steps to lose their UK general law domicile. The deemed domicile continues for three years after the general law domicile has been lost. It should be noted that this three-year period does not refer to tax years. However, the interaction of this rule with the third rule usually means that deemed domicile does, in fact, continue for three tax years.
See Example 1 and the Domicile for UK inheritance tax guidance note.
The second rule was introduced with the April 2017 changes and represents the biggest change in the IHT deemed domicile regime. An ‘FDR’ is defined as one who:
was born in the UK
had a UK domicile of origin
is resident in the UK for the yearin question, and
was also resident in
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