Glasgow-based bespoke estate planning and portfolio management company CFG Wealth Management has stressed the importance of considering the domicile of the deceased when calculating the amount of the nil rate band available for transfer for inheritance tax (IHT) purposes.
Whilst a great deal has been written on the subject of the transferable nil rate band of late in response to the recently published HMRC guidance, one particular question that has only recently been raised concerns the application of the rules to spouses who are non-UK domiciled, of which there is a growing number.
When an individual is UK domiciled, all their worldwide assets are taken into account for IHT purposes. If they are non-UK domiciled, only the assets situated in the UK come into the IHT net. When people emigrate, they will often wish to acquire a new domicile of choice and, if they do so, this may well result in an IHT saving on their subsequent death.
The downside to having a foreign domicile, however, is that the spouse exemption for IHT on transfers to the non-UK domiciled spouse is limited to