I am dealing with an estate of a lady who was born in Cyprus. Her parents were Cypriot and so was her husband. She has assets including land in Cyprus, is a Cypriot resident and has Cypriot ID.
She has lived in the UK for most of her life, also owning property here.
She moved back to Cyprus in September 2017 and died in March 2022. Between 2017 and death, she only visited the UK a handful of times and only for a few days at a time.
Having done some initial research on the point, I see that a person who has become deemed domicile in the UK through long residence, can only lose the deemed domicile status by being non-resident for at least 6 tax years, which she would just miss out on, given when she moved back to Cyprus.
However, am I correct in thinking that for IHT purposes, there is a 3 year rule and does this aplpy if someone is looking to lose their UK deemed domicile?
It’s four tax years, including the tax year of death - so should not be an issue here.
You also need to ensure that they were not UK domiciled under the general law within the three (calendar) years preceding death.
My broad understanding is that the deceased would not be deemed UK domicile for IHT purposes, as it appears she was not UK resident for at least one of the four tax years preceding death.
The three year rule applies where a person is UK domiciled and leaves the UK to become domiciled overseas by choice. They are deemed UK domiciled for three years following their departure. As it has been more than three years since she was overseas, the rule does not apply.
I am hesitant to respond as I am not sure of the reason behind Martyn’s post, however my recollection of Private International Law [which may well have changed over the years] is:-
Birth and both parents domiciled(?) in Cyprus would suggest a domicile of origin as Cyprus [I do not comment on any possible North/South complication]. NB a child born in wedlock takes the father’s domicile at date of birth, which may not be where he was at the time.
“She has lived in the UK most of her life”. Does not necessarily mean that she ever acquired a domicile of choice in England & Wales/Scotland/Northern Ireland - that would require an intention to remain.
On moving back to Cyprus any domicile of choice would have immediately reverted anyway.
Domicile under PIL governs such matters as succession rules so may be relevant in ways such as validity of any will and devolution of the estate, although I appreciate that HMRC have their own deemed rules for certain taxes.
It’s not possible to be definitive as to the domicile status at death.
It does seem that a “U.K.” domicile of choice status was acquired in lifetime. On leaving the U.K. for Cyprus either her U.K. domicile of choice continued or her original Cypriot domicile of origin resurrected.
The lattter would arise if the individual’s U.K. domicile of choice ceased which would be the case if the individual ceased to reside in the U.K. and ceased to intend to reside in the U.K. and no other domicile of choice was chosen.
The 3 year extension applicable for IHT commences from the date the U.K. domicile of choice is lost which is not necessarily the date of departure from the U.K.