Out of the country for 17 out of 20 years

[al91]

Hello Everyone,

I wonder if anyone can help me here with regards to IHT and domicile status. A little of my history first...

I'm in my early 50's and have essentially spent most of my life living and working overseas in various other countries. About two years ago, I returned to the UK for family reasons but have not worked here. My last UK employment was in 1993. I own one property in the far east and one here, in which I am currently residing in and was bought a year ago. I am not receiving any funds from overseas but using funds that I have in the UK for living.

The government web-site seems indicates that if you are out of the country for 17 out of the past 20 years, you are considered non-domiciled or non-resident and therefore you may not be liable for IHT as you considered to have left the country.

So the questions I have are, if something were to happen to me tomorrow would I be liable for any IHT? Also, would it be better for me to rent out my UK flat and leave the UK again in order to minimize if any, future IHT impact?

Thanks for your help in advance...

[AdamS93]

You have misread the guidance on HMRC’s website. You can only be deemed UK domicile, there is no such thing a deemed non-domicile. It is very hard to convince HMRC you have changed your domicile, especially when you have property in the UK. You are also stating the old 17 out of 20 rule. It is now 15 out of 20.

It sounds like you are domiciled in the UK meaning your worldwide assets will be subject to UK IHT.

There is a massive difference between domicile and residence.

[maths]

I assume prior to your departure from the UK you possessed a UK domicile of origin.

You may whilst abroad have acquired a non-UK domicile of choice. If so and assuming that continues since your return to the UK then you are exposed to IHT only on UK situs assets. If you did acquire a non-UK domicile of choice but you have now returned permanently to the UK your UK domicile of origin would have resurrected and IHT will apply to worldwide assets.

Assuming you have not returned permanently and you have acquired a non-UK domicile of choice then the current 15 out of 20 tax year deemed domicile rule (not in your case 17/20) will not as yet be satisfied.

However, if you were born with a UK domicile of origin and were born in the UK (as appears likely) then you will have become deemed domiciled for IHT in your second tax year of UK residence eg became resident in say tax year 17/18 remaining resident for 18/19 would mean your are deemed domicile for IHT for 18/19 and thereafter whilst you remain resident.This is a newly introduced rule.

Not dissimilar rules apply for income and CGT.

[al91]

Thanks for the replies and if I can give you more specifics here...

I was not born in the UK but had a UK passport at birth. Moved to the UK at the age of 6, departed at the age of 23 and returned at 49. Whilst being overseas, I did not acquire a non-UK domicile of choice.

It seems more likely that I will leave the UK towards the end of the year, meaning that I would have been outside the UK for 17.5 years out of the past 20.

Would this change anything?