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HMRC internal manual

Inheritance Tax Manual

Other domicile issues: Domicile of spouse or civil partner

Spouse or civil partner exemption (IHTM11032) on transfers on death and life is restricted to a sum equivalent to the nil rate band at the time of the transfer where the:

  • deceased or donor is domiciled in the UK and
  • the spouse or civil partner is not domiciled in the UK

Where the transfer occurred before 6 April 2013, the exemption is restricted to a total of £55,000.

For the purpose of the exemption, domicile includes deemed domicile, even in the case where a pre-1975 Double Taxation Agreement applies (IHTM27161).

In addition, IHTA/S267A allows someone who is:

  • married or in a civil partnership and
  • not domiciled in the UK

to elect to be treated as if they were domiciled in the UK (IHTM13040).

You must bear in mind that the way moveable property devolves is governed by the law of the country in which the deceased is domiciled. If the deceased was domiciled outside the UK, certain classes of beneficiaries, such as children, may have certain rights that affect the rights of the surviving spouse or civil partner. This is even more likely to be an issue when the deceased was survived by a civil partner as a number of foreign jurisdictions do not yet recognise civil partnerships and do not provide any inheritance rights to surviving civil partners.

If you are dealing with a case in which the deceased was domiciled outside the UK, had moveable property in the UK and was survived by a spouse or civil partner, you should look at the answers given at boxes 19, 20 and 21 of the form IHT401. If the information is incomplete you should ask the taxpayer or agent to explain how they have established how the estate is to be distributed. If they have taken legal advice in the deceased’s country of domicile, please ask for a copy of that advice. If necessary you may want to discuss with your manager or mentor.

Once you have the information send the file to Technical with a submission that explains the facts and the reasons for concern and the tax at stake.