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/ 21 Oct 2022

UK Inheritance Tax and Domicile – what you need to know in 2022

UK Inheritance Tax (IHT) is based on a person’s domicile, rather than residence. This means that even if you live abroad long term, you will still be liable for this legacy tax.

The estate of someone who died UK domiciled (including someone ‘deemed-domiciled’) is liable to UK inheritance tax on the worldwide assets. If that person died non-UK domiciled, their estate is liable to UK inheritance tax only on the assets held in the UK.

In this article, our private client lawyers delve into the meaning and significance of domicile, and the implications this has on inheritance tax.


Trainee Solicitor

Property Litigation & Dispute Resolution

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Samantha Fennah


Private Client

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What is the meaning of ‘domicile’?

There is no single legal definition of ‘domicile’. It is a complex general law concept which transcends nationality, residence and ethnicity.

In addition, there is also a concept known as ‘deemed domicile’ which applies only to tax, not general law, and is based upon how many years you have been resident in the UK.

Under English law there are three types of domicile:

Domicile of Origin

When a child takes their father’s (or single/unmarried mother’s) domicile (not necessarily their country of birth).

Domicile of dependence

This applies to women married before 1974 (whose domicile will mirror their husband’s) as well as minors and other legal dependents.

Domicile of choice

Acquired by moving permanently to another country.

There are no set rules to whether someone has acquired a domicile of choice. It all comes down to their individual circumstances and intentions. If challenged by HM Revenue and Customs the onus is on the executors of the estate to establish that the deceased was non-UK domiciled at the date of their death.

To establish a domicile of choice the executors will need to show:

  • The deceased was physically present and tax resident in their ‘new’ country;
  • The deceased intended to live there permanently; and
  • The deceased did not intend to ever return to the UK to live.

Deemed Domicile

Even if someone does adopt a domicile of choice outside the UK, it can take them up to four years to lose their UK domicile for inheritance tax purposes. HMRC may treat them as UK-domiciled if they:

  • were UK resident for 15 of the last 20 tax years
  • return to Britain for more than a year (if the UK was their domicile of origin and place of birth)

What are the IHT Implications of someone who is domiciled or deemed domiciled in the UK?

The estates of individuals who are domiciled or deemed domiciled in the UK when they die are liable to 40% inheritance tax on their worldwide assets (subject to a tax-free allowance of £325,000 plus a £175,000 ‘family home allowance’ for those who qualify).

For estates of individuals not domiciled or deemed domiciled in the UK, it is only the UK based assets that will be subject to IHT (subject to the tax fee allowance of £325,000).

How can our London private client lawyers help you?

Domicile is a complex area of law, particularly for inheritance tax purposes. It is relevant both for the preparation of Will for individuals with complex asset portfolios in multiple countries and for the administration of the estates of people with the same.

  • If you have assets in multiple jurisdictions, it is important that the advice you receive when preparing your Will is tailored to you and takes into account your domicile.
  • If you are responsible for administering an estate of a person with a complex asset portfolio in multiple countries, then it is essential that you seek the advice of a specialist lawyer who can advise on this complex area of law.

If you think you might need advice in relation to your domicile or the domicile of a loved one, do get in touch with our specialist Private Client team.

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