This briefing note is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice.

Countdown to 2017: Deemed domicile, inheritance tax and the need for urgent action
Andrew Goldstone
28 February 2017

Countdown to 2017: Deemed domicile, inheritance tax and the need for urgent action


Under the current rules, once a non-domiciled individual has been UK tax resident for 17 out of the previous 20 tax years, they will be treated as deemed domiciled in the UK for inheritance tax purposes. Although non-UK domiciled individuals are only subject to UK inheritance tax on assets situated in the UK, deemed domiciled individuals are treated the same as UK domiciled individuals. That means their worldwide assets, and not just their UK assets, are brought within the scope of inheritance tax.  

From 6 April 2017, a non-domiciled individual will be deemed domiciled for all tax purposes, including inheritance tax, if they have been resident for 15 out of 20 tax years.

Our recommendations

If you are a UK resident non-domiciled individual who is not yet deemed domiciled for inheritance tax under the existing rules but will become so on 6 April 2017 under the new rules, we recommend you seek urgent advice regarding your inheritance tax position. There is still a brief opportunity to protect your worldwide assets from 40% UK inheritance tax by transferring them to a trust before April.

Transferring your non-UK assets to an offshore trust before April may also offer other tax benefits including the ability to avoid immediate tax on the trust's future income and capital gains, provided you do not take benefits from the trust. If instead you were to keep the same assets in your personal name, you would be taxed on an arising basis on all future income and gains they generate. That means you'd have to pay UK income tax or capital gains tax even if the income or sale proceeds remain outside the UK.

Setting up a trust and organising the transfer of your non-UK assets to the new trust can take considerable time. You will therefore need to act very quickly if you want to benefit from this one-off opportunity.

For further information, or if you would like us to analyse your particular circumstances, please contact Andrew Goldstone at or +44 20 3321 7205 or your usual Mishcon de Reya tax contact.