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Where Taxpayers and Advisers Meet

iht allowance from dom to non dom

tiengodue
Posts:29
Joined:Sat Sep 05, 2020 10:01 am
iht allowance from dom to non dom

Postby tiengodue » Sun Nov 29, 2020 5:07 pm

Hello,

I just wanted to know if the available nil band allowance for iht is still only 325k from a dom spouse to a non dom spouse or has this changed.
My late mother has assets of around 400k and her will is a mirror will with my dad. I guess the answer to the question above may indicate if my dad needs to elect his domicile or not.

Many thanks

iwmtaxadvisor
Posts:45
Joined:Wed Sep 09, 2020 5:12 pm
Contact:

Re: iht allowance from dom to non dom

Postby iwmtaxadvisor » Wed Dec 02, 2020 10:36 am

55k allowance from UK spouse to non-UK dom spouse. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm11033

But (a) is father really non-dom? see deemed domicile notes here https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm43042, and (b) as far as I remember there is (maybe not? that might have been an EU reg.) a provision for a non dom beneficiary to elect to be treated as UK dom but that might bring everything into the UK tax net including his overseas assets, and (c) upon his second death you also need to consider the estate tax of the non-dom's country of domicile and the relevant Estate DTT and whether an 'election' as you put it is worthwhile.

If you do seek advice offer first the relevant countries and calendar dates of when the father came into /out of the UK for the last 20 years.
Robert Warren
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AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: iht allowance from dom to non dom

Postby AGoodman » Wed Dec 02, 2020 10:57 am

The spouse exemption for dom to non-dom was increased from £55k to £325k some 8-10 years ago. It hasn't changed since.

Remember your mother presumably also had a nil rate band of £325k so she could leave your father £650k in total without any inheritance tax being payable.

Incidentally, Dad could be deemed dom if he has been resident here for 15 out of the last 20 years (this has been reduced from 17 years)

iwmtaxadvisor
Posts:45
Joined:Wed Sep 09, 2020 5:12 pm
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Re: iht allowance from dom to non dom

Postby iwmtaxadvisor » Thu Dec 03, 2020 4:43 pm

Beg pardon 325k as the HMRC link says not 55k.
Robert Warren
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