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The inheritance tax revamp for non-domiciled spouses explained
KEY POINTS
- A non-domiciled spouse or civil partner can elect to be treated as UK domiciled for inheritance tax.
- The exemption for transfers to non-domiciled spouses is increased.
- Examples of the new provisions in practice.
- Consider an excluded property trust before electing for UK domicile.
Finance Act 2013 included two changes to the inheritance tax (IHT) position for spouses and civil partners domiciled outside of the UK who have UK domiciled spouses. These are contained in IHTA 1984 as follows:
- section 267ZA which allows a non-domiciled spouse to elect to be treated as domiciled in the UK for IHT purposes thereby allowing a UK domiciled spouse to make unlimited transfers to their non-domiciled spouse free of IHT; and
- section 18(2) which increases the...
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