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IHT - citizenship

Rhondorian
Posts: 5
Joined: Sat Feb 27, 2016 10:46 pm

IHT - citizenship

Postby Rhondorian » Mon Jan 09, 2017 6:55 pm

Hi all,

Scenario as follows:

A is deemed domicile for IHT in UK.

A renounces UK citizenship and lives abroad under a new citizenship until death.

Will in abroad country states that assets pass to family in UK.

Is timing relevant? Do IHT forms even need to be filled out for such an individual? What IHT is due?

Thanks

bd6759
Posts: 2196
Joined: Sat Feb 01, 2014 3:26 pm

Re: IHT - citizenship

Postby bd6759 » Mon Jan 09, 2017 7:41 pm

If A is deemed domiciled in the UK, then UK IHT will be due.

He needs to acquire a domicile of choice elsewhere in such that he will not be deemed domiciled in UK.

Lee Young
Posts: 2593
Joined: Wed Aug 06, 2008 3:26 pm
Contact:

Re: IHT - citizenship

Postby Lee Young » Tue Jan 10, 2017 8:16 pm

Renouncing citizenship may be indicative of, but does not necessarily in itself equate to, establishing a domicile of choice.
Lee Young
Solicitor, Chartered Tax Adviser and Trust and Estate Practitioner


Partner, Frettens LLP
lyoung@frettens.co.uk
01202 491701

Rhondorian
Posts: 5
Joined: Sat Feb 27, 2016 10:46 pm

Re: IHT - citizenship

Postby Rhondorian » Tue Jan 10, 2017 9:42 pm

Thanks for the responses.

So renouncing citizenship is just one indicator in establishing domicile of choice.

However, if such a person is deemed domiciled for IHT purposes in 2017 because they have lived in the UK for 25 years, how quickly can you remove this deemed domicile?

i.e if certain steps are taken can someone lose their deemed domicile as of 2018?

maths
Posts: 6804
Joined: Wed Aug 06, 2008 3:25 pm

Re: IHT - citizenship

Postby maths » Wed Jan 11, 2017 8:49 pm

This issue is complex.

On 6 April 2017 if a foreign domiciled individual has been UK resident for 15 out of the previous 20 tax years then deemed domicile status arises on 6 April 2017 for all tax purposes.

At the start of the 5th tax year deemed domicile status will be lost for IHT purposes.

riccardob
Posts: 77
Joined: Sun May 29, 2011 10:02 am

Re: IHT - citizenship

Postby riccardob » Sun Jan 15, 2017 8:14 pm

i am correct in assuming that if there are double taxation agreements
between the uk and another country said dta would
make the 15 over 20 year irrelevant?

maths
Posts: 6804
Joined: Wed Aug 06, 2008 3:25 pm

Re: IHT - citizenship

Postby maths » Mon Jan 16, 2017 12:43 am

Absolutely not.

The new domestic rules will apply for IHT DTA purposes.

riccardob
Posts: 77
Joined: Sun May 29, 2011 10:02 am

Re: IHT - citizenship

Postby riccardob » Mon Jan 16, 2017 11:37 am

many thanks again.

Just one question, will the clock start from 2017 or will is start from when the person became tax resident in the uk, for example 2005?

maths
Posts: 6804
Joined: Wed Aug 06, 2008 3:25 pm

Re: IHT - citizenship

Postby maths » Mon Jan 16, 2017 8:10 pm

The clock effectively has already started.

Thus if on 6 April 2017 an individual has been resident for at least 15 tax years out of the 20 tax years immediately preceding tax year 2017/18 then deemed domicile arises effective 6.4.17.


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