Deemed domicile meaning

The Chancellor of the Exchequer, Rachel Reeves, delivered the government’s Autumn Budget on 30 October 2024 Keenly awaited and watched, this was the first Budget from a Labour administration in fourteen years, and the first ever presented by a woman Chancellor. Many headline measures for Private Clients had been trailed in one form or another, and several of the changes—such as the Capital Gains Tax reforms—were not as draconian as many had feared, proving less severe than anticipated. It was definitely a Labour Budget, unmistakably Labour in flavour, with the Chancellor honouring election pledges not to raise income tax or National Insurance for ‘working people’, and instead securing the £40bn of tax rises by lifting employers’ National Insurance, narrowing the scope of IHT agricultural and business property reliefs, increasing CGT rates, reforming the taxation of carried interest, changing the rules for non‑UK domiciled individuals, bringing inherited pensions into the IHT net, confirming VAT on private school fees, increasing the SDLT surcharge for second homes, and even a hike in...

Accuro Trust (Switzerland) SA (as trustee of the Tiodab Trust) v Revenue and Customs Commissioners [2025] UKFTT 464 (TC) What are the practical implications of this case? With the shift to a residence-based IHT framework and the repeal of the specific statutory rule engaged here (IHTA 1984, s 48(3)), the forward-looking utility of the FTT’s conclusions is now narrow. That said, the tribunal’s analysis of what counts as excluded property by reference to domicile still matters for live issues, such as arrangements where the settlor of an excluded property trust died before 6 April 2025. More broadly, the decision underlines the need to focus on the intended sense of statutory wording and sheds light on how the FTT reads Parliament’s purpose for the settlements regime. The judge emphasised that terms should carry their ordinary, natural meaning, a point worth remembering when construing provisions within the new residence-based rules. What was the background? A settlor not domiciled in the UK created a settlement holding non-UK assets. The...

Louwman v HMRC [2025] UKFTT 295 (TC) This appeal examined the taxpayer’s income tax liabilities for the 2018–19, 2019–20 and 2020–21 tax years. She was resident and domiciled in the UK throughout, having become deemed domiciled on 6 April 2018. Before that, she had settled shares into four offshore trusts. Those shares were in companies holding investments that produced offshore income gains (OIG) and accrued income profits (AIP) in the years in question. In outline, OIG are gains realised on disposing of an interest in an offshore fund that does not report its income to HMRC, while AIP are profits arising on the disposal of securities to the extent they represent built-up interest. As a general rule, OIG and AIP are treated as income of the year of disposal for the person making the disposal, or anyone treated as doing so. Owing to her deemed UK domicile, the remittance basis was not available in those years. Absent anything further, the OIG and AIP within the trusts (via the companies)...

STOP PRESS: At the 2025 Budget, the government confirmed plans to legislate against IHT avoidance that exploits the situs of personal assets and trust property. A key proposal expands rules on indirect holdings of UK residential property to capture UK agricultural property. For further detail, see: Budget 2025—Private Client analysis — International and Policy Paper: Inheritance Tax: anti-avoidance measures for non-long-term UK residents and trusts. This Practice Note outlines amendments to the excluded property rules from 6 April 2017 introduced by the Finance (No 2) Act 2017 (F(No 2)A 2017). As a result, UK inheritance tax (IHT) is charged on UK residential property owned by (or on behalf of) a long-term UK resident (LTR), whether held directly or via intermediate structures, unless the interest is through a diversely held vehicle. Before 6 April 2025, when domicile stopped being a relevant consideration for IHT, these provisions applied to individuals who were not domiciled, or were deemed domiciled, in the UK. For guidance on how domicile affected IHT, see Practice Note:...

An individual is treated as UK domiciled where, although they are domiciled outside the UK under the common law principles outlined in Practice Note: Domicile for UK tax purposes before 6 April 2025 [Archived], a statutory rule nevertheless treats them as domiciled for one or more tax purposes. This Practice Note looks only at the deemed domicile provisions that came into force on 6 April 2017, and insofar as they apply to individuals. For details of the deemed domicile rules in place before that date, see Practice Note: Deemed domicile for tax before 6 April 2017 [Archived]. In contrast to domicile at common law, deemed domicile is not inherited from parent to child. For information on the regime brought in by the Finance Act 2013 allowing a non-UK domiciled spouse or civil partner of a person domiciled in the UK to elect to be treated as UK domiciled for IHT purposes, see Practice Note: IHT issues for mixed domicile spouses and civil partners before 6 April 2025 [Archived]. For guidance...

Domicile of individuals Q&As For general material on domicile, see: Domicile of individuals—overview. While fresh Q&As are added to this Practice Note as they arise, the individual Q&As are not updated on an ongoing basis and reflect the law only as at the date shown for each entry. Changes in domicile status There are three categories of domicile: Domicile of origin Domicile of dependency Domicile of choice An individual’s domicile of origin endures for life. It may lie dormant if a domicile of dependency or of choice is later acquired, placing the origin in abeyance, but it cannot be erased altogether. Where a domicile of dependency or of choice ceases and no new domicile replaces it, the domicile of origin automatically reasserts itself. See Practice Note: Domicile for UK tax purposes before 6 April 2025 [Archived]. The following Q&As consider changes in domicile, including: A child whose domicile of origin is outside the UK in...