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United Kingdom
United Kingdom
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Formerly domiciled resident (FDR) meaning
Published by a LexisNexis Private Client expert
What does Formerly domiciled resident (FDR) mean?
A formerly domiciled resident (FDR) is a UK tax concept for an individual who was born in the UK with a UK domicile of origin and has returned to UK residence. It is a statutory term used across inheritance tax (IHT), income tax and capital gains tax, following changes made by the Finance Act 2017.
For IHT, an individual is an FDR for a tax year if they are UK resident in that year and were UK resident in at least one of the two immediately preceding tax years. In that case, they are treated as UK‑domiciled for IHT, so their worldwide estate falls within the UK IHT charge.
For income tax and capital gains tax, a person born in the UK with a UK domicile of origin who is UK resident in the relevant tax year is treated as an FDR. They are deemed domiciled in the UK for that year, cannot use the remittance basis and may lose “protected trust” or settlements protections, with UK tax charges on worldwide income and gains.
Usage and effect are consistent across England & Wales, Scotland and Northern Ireland. The term is not a defined concept in Irish tax law.
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View the related Practice Notes about Formerly domiciled resident (FDR)
PRACTICE NOTES
Private Client Glossary (England and Wales): Wills, Probate, Trusts, Capacity and UK Taxation
Private Client England & Wales glossary A Abatement When, after settling the deceased’s funeral costs, debts and liabilities, the remaining estate cannot satisfy all legacies in full, the gifts are reduced accordingly, unless the Will shows a different intention. In a solvent estate, the order for reduction appears in Part II of Schedule 1 to the Administration of Estates Act 1925. Refer to Practice Note: Payment of legacies. Accruals basis Where income is taxed on an accruals basis, it is attributed to a given tax year by reference to the number of days within that year during which the activity giving rise to the liability accrued. See Practice Note: What is the basis of income tax?. Accumulation and maintenance (A&M) trust A form of non‑interest in possession trust designed to benefit children and young people up to 25, which received favourable inheritance tax treatment between 1975 and 2006. See Practice Note: Accumulation and maintenance trusts—IHT [Archived]. Accredited Legal Representative (ALR) ...
21 May
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