Election for UK domicile

When making a domicile election for IHT purposes on the part of a non-English domiciled spouse (H) to obtain a full spouse exemption from a deceased deemed domiciled spouse (W) (i.e. a “death election”) must the “effective date” be the date of the death of W?

Jeremy Crouch

Both a lifetime and a death election ([IHTM13042] must contain the date from which the election is to take effect, [IHTA84/S267ZB(3)].

That date must be:

• on or after 6 April 2013, [IHTA84/S267ZB(4)], and

• be within a period of

• in the case of a lifetime election, seven years of the date of the election, [IHTA84/S267ZB(4)],

• in the case of a death election, seven years of the deceased’s death, [IHTA84/S267ZB(4)].

In addition, [IHTA84/S267ZB(5)] says that at the date on which the election is to take effect, the person making the election must have been married to, or in a civil partnership, with a person who was domiciled in the UK, [IHTA84/S267ZB(4)] at that time. Note that there is no requirement for that person to be domiciled in the UK throughout the period from the date of the election takes effect until the date the election is made. The person making the election does not need to be married or in a civil partnership when the election is made ([IHTM13042].

A consequence of this is that if a person domiciled in the UK makes a gift to their non-UK domiciled spouse or civil partner before 6 April 2013 and dies within seven years, the £55,000 limit that applies before that date continues to apply ([IHTM11033].

When an election is made, ([IHTM13042] the person making the election will be treated as domiciled in the UK for all Inheritance Tax (IHT) purposes from the date stated in the election (see above) [IHTM13046]. Consequently, any transfers between spouses or civil partners made after that date qualify for full spouse or civil partner exemption.

Whether to make an election and the date it is take effect from will require careful consideration as it could mean that a transfer that did not give rise to a charge at the time is was made, proves to be chargeable.


David, who is domiciled in the UK transfers property worth £1m in 2014 to his spouse, Birgit who is not domiciled in the UK. Subsequently, in 2016, Birgit transfers some German shares to the trustees of an offshore trust. David dies in 2019.

At the time of David’s transfer, the value transferred is exempt to the extent of £325,000 and a PET to the extent of £675,000. Following his death, the failed PET is chargeable and after deducting the nil-rate band, £350,000 is subject to tax.

Birgit’s transfer was a transfer of excluded property, [IHTA84/S6(1)]. Following David’s death, Birgit has the choice of electing to be treated as domiciled in the UK. If she does so, the gift from David in 2014 will become fully exempt as a transfer where both spouses are domiciled in the UK.

However, Birgit will then be treated as domiciled in the UK from 2014 for all IHT purposes. This means that her transfer to the trustees is no longer one of excluded property and will be subject to IHT. As a transfer to a trust, it will be immediately chargeable to tax.

Birgit will need to consider all the consequences of making an election. Should she decide to go ahead with the election, the requirements to deliver an account in respect of the transfer and the changes to the due dates for tax and interest are set out at [IHTM13048].

With these notes, you can choose the date on which you want the election to start from but it must be within 7 years. (see IHTM13042)

Lucy Orrow
Lambert Chapman LLP

No, the “effective date” need not be the date of death of W.

Under IHTA 1984 s.267ZA(3) the death election is treated as having effect on a date specified under s267ZB(4), namely, on or after 6 April 2013 and within the period of 7 years ending with the death of W.

Death election must be made within 2 years of death of W.

W dies 1 July 2018.

Death election must be made on or before 30 June 2020.

The date from which it may be effective is anytime on or after 1 July 2011.

Malcolm Finney