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This is fun

Currently it is UK domiciles who pay inheritance tax but once the domicile status is abolished, the Government wants the levy to apply to UK residents who have been in the country for longer than 10 years.

What makes it difficult to move abroad and not pay inheritance tax is that domicile status. Residence, thus tax on income, is relatively easy to dodge. Dimicile, thus inheritance, much more difficult.

But if the domicile status is being abolished, then dodging inheritance by moving abroad becomes much, much, easier.

Or so I would logically think at least.

11 thoughts on “This is fun”

  1. Bolke in Pictland

    Combine this with a wealth tax and which rich person wouldn’t leg it?

    I suppose it’ll often be passive in the sense that people who’ve been resident abroad for years will just decide not to return home.

  2. IHT and UK domicile

    UK-domiciled individuals are chargeable to IHT on worldwide assets, but non-UK domiciled individuals are only chargeable to IHT on UK assets.

    But, current rules include…

    Since 6 April 2017 you’re automatically deemed UK domiciled if you’re resident in the UK for 15 of the 20 years before the relevant year.

    Presumably it’s a tightening of the above position.

    There are already rules that apply to IHT but not other taxes so I don’t think it’s the concept of ‘domicile’ that is being abolished only how that applies to CGT and income tax.

  3. To levy the tax they have to find out first. Say I left the U.K. four years ago and die somewhere with no IHT… who tells HMRC?

  4. Andrew Again,

    The UK has double-taxation conventions with Ireland, the Netherlands, Sweden, France, Italy, Switzerland, the USA, South Africa, India, and Pakistan. If you die in one of them while still domiciled in the UK (I.e. if you left the UK less than five years ago), then HMRC collects the lot.

    Elsewhere in the world I suspect it’s up to your inheritors to declare it to HMRC. Might be an issue if they still live in the UK.

  5. Wait, I’m still domiciled in the UK if I left less than five years ago?
    How does that work?
    I emigrate one day but still have to pay tax for another five years?

  6. As I’ve found when *trying* to emigrate to Boganboyland ..a while back…

    The dutch state, when you fully emigrate, assume you have Deceased and will charge you the full 45% Inheritance Tax on current estate *and* a fat portion of “projected wealth” because you dare to Punch Out.

    Would have been funny if the australian government actually *facilitates* that claim, and if you don’t pay up… pays it and dobs that claim on you…

    One of the many reasons why I can’t just hop over and taste Bogan’s Bin Stew, even though I would have been in the relative vicinity…
    You get fucked over sideways whatever you do/try…
    I’d be fucked either way

  7. *sigh* If the austrailan government actually did not recognise such nonsense, but it actually *facilitates* …

    cut ‘n paste …it has its hazards…

  8. It is the “non-domiciled” status that is being abolished, not the “domiciled” status. So if you are an US citizen resident in the UK you can pay two lots of IHT on your world-wide assets.
    Boris had to pay US tax on the “profit” on selling his principal private residence: perhaps Rishi noticed and wondered why we shouldn’t get a bit of tax from all those American “investment bankers”

  9. Tim, the current plan, based on last week’s announcements but no draft legislation yet, is to move from a domicile test to a residence test, but with a ten year window either side – so y people will be able to come into the UK and keep their non-UK assets exempt from inheritance tax for ten years, but when anyone leaves they will still be liable if they die within ten years after going non-resident.

    How long have you been out for? You might have to keep doing the keep-fit cycling for a bit longer.

  10. My late father, resident in Cyprus from 1995 until death in 2023 (and a card-carrying Cypriot Resident, and Cypriot tax payer) is classed as UK domiciled for IHT. Rent on UK property was declared on his Cypriot tax return.

    The reasoning is that as he still had his passport and UK property, he was still British.

  11. ‘If the australian government actually did not recognise such nonsense, but it actually *facilitates* ‘

    Yeah. Sorry Grikath. We have a bureaucracy too.

    In fact I was a bureaucrat once upon a time. Surely enough to make anyone tremble.

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