We are dealing with an Estate where the deceased had a domicile of origin of Scotland. She moved to England many years ago and acquired a domicile of choice of England. In the two - three years before she died she was liosing mental capacity and her attorney under an LPA for health and welfare made the decision to move her to a care home in Scotland. She was there for just over six months before she died.
On the application for the Grant or Probate, we declared her domicile at date of death as Scotland on the basis that she had left England and reverrted back to her domicile of origin. However, given that she did not make the decision to leave England, could it be argued that she still had her domicile of choice at date of death?
What differences in terms of tax and succession law do you perceive will turn on an ultimate determination of domicile? The tax consequences of death are likely to be identical unless they follow from the different underlying property law in question. Scotland has limited jurisdiction over income tax rates and its own Land and Buildings Transaction Tax similar but not identical to SDLT (and most unusually Wales has its own such tax); it should not be assumed that the treatment of trusts and estates will be identical in all locations.
Scots law on issues other than taxes can differ from the law of E&W or NI. But, for example, E&W private international law will itself apply Scots law to the devolution of land situate in Scotland. IHT and CGT apply in principle UK- wide, with (very few) specific adaptations for Scotland and Scots law will be âforeign lawâ where the UK taxes persons governed by an equivalent foreign law.
UK tax law certainly recognises the marked juridical differences in structure between general and limited partnerships formed in the respective jurisdictions and the different tax consequences that flow from them. The law of joint ownership is also different. Scotland does not recognise the interim rights that are created by a binding contract for the sale of land which affects the operation of s.28 TCGA 1992 (timing of a disposal) and when a disposition is made for IHT.
IHT400 asks if the deceased was domiciled in Scotland. Separate grants may be needed for property in each country. Before 6 April 2025 domicile âin the UKâ was the territorial nexus and remains relevant for Treaties, though deemed domicile could be based on long residence.Strictly no one is ever actually domiciled âin the UKâ ; IHTA did not expand on that but Sch 1 IA 1978 defines the obvious. On and after the above date residence is the principal charging status and is now (and was before when relevant) based on the income tax position which is uniform throughout the UK. This is also true of those subject to Scottish tax rates and bands (âa Scottish Taxpayerâ) if they have additionally a âclose connectionâ to Scotland as definedâ-ss. 80C-HA Scotland Act 1998.
A neat digital trick is to insert âScotlandâ in the Search box of the IHTM main contents page and a treasure trove of references to the âold enemyâ appears. To show what we Sassenachs are up against: âpoliciesâ is a garden or grounds around a country house, as well as what you thought they were.
In addition to the points Jack raises is the implications of the Scottish law of succession, under which children have staturory rights to a share of a deceasedâs estate, unlike under English Law.
If the deceased had family, this is also an important aspect to consider before picking a domicile without strong supporting evldence.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
I agree with Christopher Salomons as to the change of domicile issue. In the circumstances disclosed it seems that the domicile of choice is England and therefore everything else follows according to English law.
I would think the actions of the Attorney under the LPA are highly questionable unless done for the purpose of having the deceased near friends and relatives in Scotland which in turn might be unlikely as the deceased seems to have been living in England for many years and acquired a domicile of choice in England. The move to Scotland in the circumstances seems very questionable.
Otherwise Jack Harper & Paul Saunders are correct in their initial assessment of the situation.
I have nothing to add to the comments above save a link to the HMRC Manual confirming an adult who has reached the age of legal capacity and has lost mental capacity retains the domicile they had at that time:
But for IHT - yes, the UK is the UK, so this is more likely to be relevant to those who (were) moved into or out of a UK jurisdiction.
It will be interesting to see a case (which Iâm sure will come in time) where an attorney moves a person lacking capacity to, or keeps a person who loses capacity in, the UK - given the exposure to IHT will now be based on residence. Potentially some tricky family dynamics given nothing âfreezesâ Pâs residence status at the point they lose capacity.
I disagree. Para 22 Sch 45 FA 2013 (about days spent) and the factual conditions attached to other ties are interpreted as regards the taxpayer being the relevant individual in para 1(1). The circumstances of an attorney are of no concern. The capacity of the taxpayer may well be pertinent for para 22(4) and (5).
Unlike domicile of choice the SRT does not now turn on the taxpayerâs intention although it could under the law for 2012-3 and earlier years: s.6A(5). The legislature has decided to encourage litigation by deliberately not exhaustively defining âhomeâ in para 25 which may bring in intention; there is no nomination facility as for CGT PPRR.
A similar boost to litigation was built into SDLT by not exhaustively defining âdwellingâ, aided and abetted by HMRCâs cynical failure to provide guidance, now in SDLTM00410-430, from 2003 to October 2019. So dwelling has its ordinary meaningââas any fule noâ. Yeah, right!