Inheritance Tax Manual

IHTM47071 - Long-term UK residence test: Post 1975 Double Taxation Conventions

If a person is a long-term UK resident they will be treated as domiciled in the UK for the purposes of IHT under the terms of these conventions. The relevant Double Taxation Convention will apply if the individual is in scope for either UK IHT or the equivalent tax/duty in the convention partner country.  

See IHTM04315 for indirectly owned UK residential property. 

Republic of Ireland 

Taxes covered are UK Inheritance Tax and Republic of Ireland capital acquisition tax and gift tax.    

A person will be regarded as domiciled in either contracting state if they are domiciled under general law or treated as so for tax purposes under their respective laws.  

Each state retains the right to tax assets under their own law and where this results in both states taxing the same property, the situs and credit provisions within the convention will determine which state has subsidiary taxing rights.  

Taxing rights in relation to property comprised in a settlement can vary depending on the proper law of the settlement and the domicile of the settlor. 

South Africa  

Taxes covered are UK Inheritance Tax and estate duty and donations tax in South Africa.  

A person will be regarded as domiciled in the UK if they are domiciled under the general law or treated as domiciled for the purposes of UK IHT.   

A person will be regarded as domiciled in South Africa if they are ordinarily resident in South Africa. 

Taxing rights can vary depending on residence in either state for income tax purposes and whether the person was a national of South Africa or a national of the UK.   

For property comprised in a settlement, if the settlor had a fiscal domicile in South Africa under Article 4(1)(b) at the date the settlement was made and had not been domiciled in the UK at any time in the preceding 10 years, then under Art 5(2) the UK has no taxing rights even if the settled property would otherwise be in the scope of IHT as a result of the settlor’s long term UK residence at the date of the periodic or exit charge. This rule does not apply to property defined by Articles 6, 7, 8 and 9, namely UK immovable property, certain assets of a UK business, ships and aircraft, shares, debentures and unit trusts. 

USA  

Taxes covered are UK Inheritance Tax and federal estate duty or gift tax in the United States, including generation skipping transfers.   

A person will be regarded as domiciled in the UK if they are domiciled under general law or treated as so domiciled for UK IHT purposes. 

A person will be regarded as domiciled in the US if they were a resident or a national of the US at any time during the preceding 3 years.  

Taxing rights can vary depending on residence in either state for income tax purposes and whether the person was a national of the United States of America or a national of the UK.   

For property comprised in a settlement, if the settlor was domiciled in the US and not a UK national at the date the settlement was made, then under Art 5(4) the UK has no taxing rights even if the settled property would otherwise be in the scope of IHT as a result of the settlor’s long term UK residence at the date of the periodic or exit charge. This rule does not apply to UK immovable property or assets of a UK business. 

Where there is a UK occasion of charge (e.g. entry, exit and ten year anniversary charges), HMRC expect an IHT 100 to be submitted for each occasion of charge even if the application of the treaty results in nil tax.  

Netherlands  

Taxes covered are UK Inheritance Tax and succession duty, gift tax and transfer duty in the Netherlands.  

A person will be regarded as domiciled in the UK if they are domiciled under general law or treated as so for the purposes of UK IHT. 

A person will be regarded as domiciled in the Netherlands if they are a resident of the Netherlands. Currently, Dutch nationals are regarded as resident in the Netherlands for 10 years after their departure.   

For property comprised in a settlement, if the settlor had a fiscal domicile in the Netherlands under Article 4(1)(b) at the date the settlement was made, was not a UK national and had not been domiciled in the UK at any time in the preceding 10 years, then under Art 11(2) the UK has no taxing rights even if the settled property would otherwise be in the scope of IHT as a result of the settlor’s long term UK residence at the date of the periodic or exit charge. This rule does not apply to property defined in Articles 5, 6 and 7 namely immovable property, certain UK business assets, ships and aircraft. 

Sweden  

Taxes covered are UK Inheritance Tax and Swedish inheritance tax and gift tax.  

A person will be regarded as domiciled in the UK if they are domiciled under the general law or treated as domiciled for UK IHT. 

A person will be regarded as domiciled in Sweden if they were resident in Sweden in accordance with its law governing Inheritance tax or gifts tax or if they were a national of Sweden. 

Inheritance tax and gift tax was abolished in Sweden on 31 December 2004. 

For property comprised in a settlement, if the settlor had a fiscal domicile in Sweden under Article 4(1)(b) at the date the settlement was made, was not a UK national at that time and had not been domiciled in the UK at any time in the preceding 10 years, then under Art 5(4) the UK has no taxing rights even if the settled property would otherwise be in the scope of IHT as a result of the settlor’s long term UK residence at the date of the periodic or exit charge. This rule does not apply to property defined by Articles 6, 7 and 8 (UK immovable property, certain assets of a UK business, ships and aircraft). 

Switzerland  

Taxes covered are UK Inheritance Tax and cantonal and communal taxes on estates and inheritances in Switzerland. It does not apply to settlements in Switzerland where there is no interest in possession.  

 A person will be regarded as domiciled in the UK if they are domiciled under general law or treated as so under UK law.  

 A person will be regarded as domiciled in Switzerland if they are domiciled or resident of Switzerland under Swiss law or are a Swiss national and their succession must be governed under Swiss Civil Law.  

Taxing rights in either state can be restricted in cases of temporary residence by reason of employment provided the person has retained the domicile of the state in which they are a national.