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

HMRC internal manual

Inheritance Tax Manual

Domicile: Finance (No 2) Act 2017 changes: summary of the Inheritance Tax changes

Inheritance Tax (IHT) already has deemed domicile rules (IHTM13024). There are three changes to these rules all of which are effective from 6 April 2017:

  • a reduction in the number of years of residence in the UK necessary for deemed domicile to apply (IHTM13061)
  • a difference to the way the years are counted (IHTM13061) and
  • a new category of deemed domicile, the formerly domiciled resident (FDR).

The FDR category applies to individuals born in the UK with a UK domicile of origin, who have acquired another domicile and then become resident in the UK. The new rules will ensure that their foreign property and the property that they settled when they were non-UK domiciled will be within the scope of IHT while the individual is UK resident, as long as they were UK resident in at least 1 of the 2 years prior to the year in which any IHT charge arises. There is more detail on this measure at IHTM13062.