beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Inheritance Tax Manual

Domicile: election by non-UK domiciled spouse or civil partner: consequences of making an election

When an election is made, (IHTM13042) the person making the election will be treated as domiciled in the UK for all Inheritance Tax (IHT) purposes from the date stated in the election (IHTM13046). Consequently, any transfers between spouses or civil partners made after that date qualify for full spouse or civil partner exemption.

Whether to make an election and the date it is take effect from will require careful consideration as it could mean that a transfer that did not give rise to a charge at the time is was made, proves to be chargeable.


David, who is domiciled in the UK transfers property worth £1m in 2014 to his spouse, Birgit who is not domiciled in the UK. Subsequently, in 2016, Birgit transfers some German shares to the trustees of an offshore trust. David dies in 2019.

At the time of David’s transfer, the value transferred is exempt to the extent of £325,000 and a PET to the extent of £675,000. Following his death, the failed PET is chargeable and after deducting the nil-rate band, £350,000 is subject to tax.

Birgit’s transfer was a transfer of excluded property, IHTA84/S6(1). Following David’s death, Birgit has the choice of electing to be treated as domiciled in the UK. If she does so, the gift from David in 2014 will become fully exempt as a transfer where both spouses are domiciled in the UK.

However, Birgit will then be treated as domiciled in the UK from 2014 for all IHT purposes. This means that her transfer to the trustees is no longer one of excluded property and will be subject to IHT. As a transfer to a trust, it will be immediately chargeable to tax.

Birgit will need to consider all the consequences of making an election. Should she decide to go ahead with the election, the requirements to deliver an account in respect of the transfer and the changes to the due dates for tax and interest are set out at IHTM13048.

An election to be domiciled in the UK does not apply when considering a person’s domicile in connection with:

  • specific savings held by taxpayers domiciled in the Channel Islands or Isle of Man, IHTA84/S267ZA(5), (IHTM27270)
  • certain British Government securities issued by the Treasury that are exempt where the owner is domiciled abroad, IHTA84/S267ZA(5), (IHTM27241)
  • double taxation agreements with France, Italy, India or Pakistan, IHTA84/S267ZA(6) (IHTM27161)