Liability to UK Inheritance Tax (IHT) is governed by domicile. Many UK expatriates fail to realise that, even when they are no longer resident in the UK, they remain subject to UK IHT on their worldwide assets unless they have actively shed their UK domicile and established a new domicile outside the UK.

In order to lose UK domicile status, it is necessary for a person to have been domiciled abroad for a period of at least three UK tax years and to be able to demonstrate that they do not intend to return to the UK.

To achieve this, they will need to cut all ties with the UK by, for example, selling property, closing bank accounts and cancelling club subscriptions. Other actions that reinforce the decision include drawing up a foreign will and demonstrating a wish to be buried in their new country of domicile.

If you have not acquired an intention to remain permanently or indefinitely elsewhere then your domicile remains UK for IHT purposes, Sovereign has processed many successful applications for clients seeking certainty on non-UK domiciled status. A positive counsel opinion regarding a new domicile of choice should be definitive and enables the client to plan against UK IHT with confidence.