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HMRC internal manual

Inheritance Tax Manual

Domicile: domicile of first spouse or civil partner to die

Every person, UK domiciled or not, is entitled to the full nil rate band to be set against their estate that is subject to IHT.

The availability of TRNB on the estate of the first to die of a non UK domiciled spouse or civil partner is calculated only by reference to property that is potentially subject to an UK IHT charge. For a non domiciled spouse or civil partner, VT [IHTM43020] will be calculated only by reference to their estate in the UK. Assets held outside the UK, by a person not domiciled, or deemed domiciled in the UK, regardless of the devolution of those assets are not taken into account when calculating the available unused nil rate band.

Thus where the survivor dies in the UK and their spouse or civil partner, who held no UK assets, died domiciled abroad leaving all their overseas assets to their children, none of the nil rate band was used on the first death. The personal representatives of the survivor may claim to transfer 100% of the nil rate band to the estate of the survivor.

Example

Abdul domiciled abroad. His only asset situated in the UK was a US dollar account containing US$250,000. He left this and the remainder of his estate to his son, Jamil who lives in the UK. After the death, his wife, Soroya, moved to the UK to live with Jamil and died domiciled in the UK.

The assets situated outside the UK are not liable to IHT. The US dollar account is left out of account [IHTM04380] in determining Abdul’s estate at death. So although whole estate passed to Jamil, no property was chargeable to IHT, leaving the nil rate available for transfer in full on Soroya’s death.