Domicile of deceased husband

[bess]

I realise domicile is a thorny issue. I am reluctant to take paid advice before I at least know what the issues are. I have tried several advisors already who have admitted it is not their field.

I am English and although my husband and I lived abroad from 1985-1996, have always been UK domiciled.
My husband was a naturalised UK citizen but following our return to UK claimed Hungarian domicile.
He died in January. There are two houses in Hungary, one of very small value was in his name at the date of death, the other of greater value was still registered in the name of the sellers we bought it from in 1996 due to a technicality. It is now registered in his name. Neither yields any income. There is no other foreign income.
The property is left to me in the will.

I have received a self assessment tax form to fill out in his name, including domicile pages.
What are the implications for me of his domicile?

[Taxbar]

Domicile cases are difficult and can be costly.

if you inherit and both you and your Huband are UK Domiciled or Deemed Domiciled the Spouse exemption will apply and no IHT.

Daniel Feingold
STP
info@stratax.co.uk

[King_Maker]

Was your husband Tax Resident in the UK for each tax year from 1996 until 2005?

Are there any Inheritance Taxes in Hungary?

[bess]

Thank you for your quick responses.
We returned on 1 September 1996 so I expect the UK tax kicked in the following April. But in fact I don't think we had any income that year.

There will be Hungarian inheritance tax to pay.

[King_Maker]

There does not seem to be any IHT liability in the UK.

If your husband was Domiciled in the UK when he died, then, as Daniel Feingold has said, the inter spouse exemption applies.

If he was domiciled abroad, then foreign situated assets are exempt.

[bess]

He was domiciled abroad but tax resident here since 1996.
Thank you very much for your help. That is a great weight off my mind.

[bess]

Forgive me for re-opening this.
If he was domiciled abroad, may there be retrospective IHT to pay on our UK assets then - since the spouse exemption will be lowered to £55,000? For probate purposes I had stated him to be UK domiciled; this was accepted and no IHT paid.

He had lived in UK since 1960 and based here ever since. Although we had 11 years as expatriates since 1985, we had a UK residence available to us for some of those years and considered England home.

Would I not be safer to claim UK domicile and thus be sure of avoiding any retrospective IHT difficulties?

[King_Maker]

No, the £55,000 Inter spouse limit does not apply to you, if your husband (the transferor) was domiciled abroad.

If he was UK domiciled, the full inter spouse exempt applies anyway.