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The inheritance tax (IHT) exempt amount a UK-domiciled individual can transfer to a non-domiciled spouse or civil partner is to be increased.
There is currently a lifetime limit of £55,000 on the value of the assets that can be transferred free of IHT when the spouse or civil partner to whom the assets are transferred does not have a UK domicile.
New rules to be introduced in Finance Bill 2013 will raise the cap to the level of the prevailing nil-rate band.
The inheritance tax (IHT) exempt amount a UK-domiciled individual can transfer to a non-domiciled spouse or civil partner is to be increased.
There is currently a lifetime limit of £55,000 on the value of the assets that can be transferred free of IHT when the spouse or civil partner to whom the assets are transferred does not have a UK domicile.
New rules to be introduced in Finance Bill 2013 will raise the cap to the level of the prevailing nil-rate band.
Under a new election regime, individuals who are domiciled other than in the UK and married or in a civil partnership with a UK-domiciled person will be able to elect to be treated as UK-domiciled for IHT purposes.
Individuals who have become UK-domiciled will be able to make a retrospective election to cover an earlier period in which they were non-UK domiciled, while people whose marriage or civil partnership has been dissolved will be permitted to make a retrospective election to cover the period in which they were married or in civil partnership with a UK-domiciled person.
The election will affect only an individual’s treatment for IHT purposes. It will have to be submitted in writing to HMRC and may be made at any time after marriage or registration of the civil partnership.
Elections that follow a death will usually be valid only if they are made within two years. The personal representatives of non-domiciled individuals will be able to make a death election on their behalf.
Electing spouses making either a lifetime or death election will be able to choose a date from which the election applies, going back up to a maximum of seven years so that lifetime gifts during the period are covered. The earliest date that can be specified is 6 April 2013.
Elections will be irrevocable while the electing person continues to remain resident in the UK. They will cease to have effect if the elector is resident outside the UK for more than four full consecutive tax years.
