IHT/Spouse Exemption for Non-Domicile

I am dealing with the administration of an estate where the deceased was domiciled in Brazil.

All assets appear be held abroad, save for a small amount of liquid assets and a half share interest in a UK property.

The property is worth between £1,000,000 and £1,500,000 in total. The deceased’s half share interest in the property (held as TiC) passes into a life interest trust in favour of his spouse, who is also domiciled in Brazil.

Am I correct in thinking that, whilst the deceased’s worldwide assets will need to be disclosed in the IHT400, when applying the Grant of Probate for the deceased’s estate, the only assets which will be subject to Inheritance Tax will be those assets which are based in the UK.

Am I also correct in thinking that the spouse exemption available to this a state is capped at £325,000?

Any guidance would be very much appreciated.

Kind regards.

Martyn Dixon
Harold Bell Infields & Co

As both spouses are domiciled outside of the UK, s.18(1) IHTA 1984 applies, so that the IPDI in favour of the widow is exempt from UK IHT. This is on the basis that the deceased has neither a deemed UK domicile, nor has at any time had a UK domicile which could give HMRC an edge in arguing for him to have been UK domiciled at his death.

The limitation under s.18(2) IHTA 1984 only applies where the deceased is domiciled within the UK, and the surviving spouse/civil partner is not.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

Yes, as the deceased is non-UK domiciled, only UK-situs assets are subject to UK inheritance tax.

As both spouses are non-UK domiciled, I believe there is NO restriction on the spouse exemption.

You will need to complete an IHT401 confirming the fact that the deceased was non-UK domiciled, and I do not believe full details of the assets abroad are required, save an approximate value.

Kind regards.

Ihsan Ali
I Will Solicitors Ltd

If neither spouse is domiciled in the UK, there is no limit to the spouse exemption.

Cliona O’Tuama