IHTM42603 - Foreign element: additional test of domicile
If property in a settlement would otherwise be excluded property under s48 or s48ZA and the conditions of IHTA84/S80 or S81 are satisfied, then in order for聽the property to be excluded it may be necessary to also test the long-term UK residence or domicile status of more than one person or the same person on different dates.바카라 사이트�바카라 사이트�聽
Consult with바카라 사이트疶echnical바카라 사이트痑t an early stage if the facts are not clearly covered by the guidance below, particularly if바카라 사이트�聽
the various conditions were not satisfied immediately聽prior to 6 April 2025 but could be on or after that date (there is a risk of an exit charge)聽
the conditions were satisfied immediately聽prior to 6 April 2025 but are no longer satisfied on or after that date (in which case, there may now be relevant property subject to future charges, but with rate relief).聽
A:바카라 사이트疻hen바카라 사이트疘HTA84/S80 applies바카라 사이트�바카라 사이트�聽
바카라 사이트疻hen IHTA/s80 applies then the Act provides for a new, separate, deemed聽trust, together with a deemed commencement date and a deemed settlor바카라 사이트�(IHTM42231)聽
If the settlor of the deemed trust is a long-term UK resident (on or after 6 April 2025) or was domiciled in the UK (or deemed to be domiciled in the UK) (for times before 6 April 2025) at the deemed commencement date, then the foreign assets in the trust cannot be excluded property in the first place.바카라 사이트�바카라 사이트�聽
However, if that settlor is not a long-term UK resident (on or after 6 April 2025) or not domiciled in the UK (before 6 April 2025) at the deemed commencement date then the foreign assets in the deemed trust can only be excluded property if an additional聽test is met.바카라 사이트�바카라 사이트�聽
The additional聽test is that the settlor of the original trust must not be a long-term UK resident (on or after 6 April 2025) or not domiciled in the UK (before 6 April 2025) when the assets became comprised聽in the original trust.바카라 사이트�바카라 사이트�聽
In summary, excluded property can only be available if both the original settlor and the deemed settlor were not connected to the UK by way of long-term UK residence or domicile.바카라 사이트�바카라 사이트�聽
Example바카라 사이트�聽
Mr A died in 2019 and left his estate in trust for Mrs A for life and thereafter on trust for the wider family on discretionary trusts. Because the initial聽trust is an immediate post-death interest for her, IHTA/s80 is engaged.바카라 사이트�바카라 사이트�聽
Neither were domiciled in the UK at that time.바카라 사이트�聽
Scenario 1바카라 사이트�聽
Mrs A died in 2024: this triggers the deemed settlement of which she is the settlor.바카라 사이트�聽
If she was still non-domiciled at the time of her death聽then the foreign assets in that trust are excluded property.바카라 사이트�바카라 사이트�聽
And because Mr A 바카라 사이트� the actual settlor 바카라 사이트� was not UK domiciled on his death,聽the additional聽test is also satisfied so that for the purposes of charges within Ch III of the Act the foreign assets are still excluded property.바카라 사이트�바카라 사이트�聽
Scenario 2바카라 사이트�聽
Mrs A surrendered her interest to the trustees in 2024, when she had become UK deemed聽domiciled. Again聽this triggers the deemed settlement聽but the foreign assets will not be excluded anyway聽and an anniversary charge will arise in 2029 but with rate relief for the period between 2019-2024.바카라 사이트�聽
Scenario 3바카라 사이트�聽
Similarly, if Mrs A dies in 2027 while she is a long-term UK resident then the foreign assets in the deemed settlement would not be excluded property and again the additional聽test of Mr A바카라 사이트檚 domicile in 2019 makes no difference with the same result as in Scenario 2 above.바카라 사이트�聽
B: When IHTA84/S81 applies바카라 사이트�바카라 사이트�바카라 사이트�聽
If an event occurs such that property in a trust (바카라 사이트淭1바카라 사이트�) becomes comprised聽in another trust (바카라 사이트淭2바카라 사이트�) then, for the purposes of the charging provisions within Chapter III part III of the IHTA84 only, IHTA/S81바카라 사이트痯rovides that the property is deemed聽to remain聽in T1. (IHTM42229)바카라 사이트疊ut if that event happens the availability of existing excluded property status for foreign property may need to be reviewed for the purposes of the IHT trust charges.바카라 사이트�바카라 사이트�聽
Inter-trust transfers; times on or after 6 April 2025바카라 사이트�바카라 사이트�聽
The deeming under IHTA/S81 no longer聽requires excluded property to be retested.바카라 사이트� It only depends on the status of the settlor of T1.바카라 사이트�聽
In particular聽
If the settlor of T1 (바카라 사이트淪1바카라 사이트�) is living at the time of the event then the status of the transferred property, before and after the transfer, depends solely on whether S1 is, or is not, a long-term UK resident. In other words, the transferred property (which is deemed聽to remain聽in T1) can only be excluded property if and for so long as S1 is not聽a long-term UK resident.바카라 사이트�바카라 사이트�聽
If S1 died before on or after 6 April 2025 the transferred property is excluded only if S1 was not a long-term resident immediately聽before the death.바카라 사이트�聽
If S1 had died before 6 April 2025 then the transferred property is excluded only if S1 was not domiciled in the UK when the property became comprised聽in T1.바카라 사이트�聽
Inter-trust transfers; times prior to 6 April 2025聽
If the settlor of T1 was domiciled in the UK (or deemed聽to be domiciled in the UK) when the assets became comprised聽in T1 then the foreign assets in the trust could not have been excluded property in the first place.바카라 사이트�바카라 사이트�聽
However, if the settlor of T1 was바카라 사이트�not 바카라 사이트痙omiciled聽in the UK when the assets originally became comprised聽in T1 then the transferred assets (which are deemed聽to remain聽in T1) could only have continued to have excluded property status if an additional聽domicile test was聽met.바카라 사이트繏繏�聽
The additional聽domicile test depended upon the time when IHTA/s81 applies,바카라 사이트痠.e. the assets in T1 become comprised聽in T2.바카라 사이트�바카라 사이트�聽
IHTA/S81 transfers prior to 22 July 2020바카라 사이트�聽
The additional聽test was that the settlor of T2 must also have been non-domiciled when the assets in T2 originally became comprised聽in T2 (IHTA/S82).바카라 사이트�바카라 사이트�聽
Put simply, excluded property status would only be available for the transferred assets if the settlors of both T1 and T2 were historically non-domiciled.바카라 사이트�바카라 사이트疭ection 82 is now repealed for times on or after 6 April 2025.聽
IHTA/S81 transfers on or after 22 July 2020 (Finance Act 2020)바카라 사이트�聽
The additional聽domicile test was different and was set out in IHTA/S82A, which has also been repealed.바카라 사이트�바카라 사이트�聽
The additional聽domicile test focused on the domicile of the settlor of T1 or the domicile of the person that caused the assets to become comprised聽in T2.바카라 사이트�바카라 사이트�聽
The trustees use their trust powers to transfer assets from T1 to T2.聽
In this case the transferred assets can only have continued to have excluded property status if the settlor of T1 was not domiciled in the UK at the time the assets are transferred to T2.바카라 사이트�바카라 사이트�聽
And if further transfers were made from T2 to T3, say or from T2 back to T1 then these were known as 바카라 사이트�바카라 사이트�qualifying transfers바카라 사이트�바카라 사이트痑nd the settlor of T1 must have remained聽non-domiciled on each of these occasions. But if at the time of a qualifying transfer the settlor of T1 was UK domiciled then the transferred assets no longer had excluded property status.바카라 사이트�바카라 사이트�聽
And if the settlor of T1 is no longer living at the time of a qualifying transfer (and the death is not a qualifying transfer) then the additional聽domicile test was treated as satisfied.바카라 사이트�바카라 사이트�聽
The assets were transferred to T2 because of an assignment or the exercise of a general power of appointment바카라 사이트�聽
In this case the transferred assets remained excluded property status if at the time of an assignment or the exercise of the power (which must have occurred on or after 22 July 2020) the assignor or the power holder was neither domiciled nor deemed聽domiciled in the UK.바카라 사이트�聽
Note that the assets may not have become comprised聽in T2 immediately聽when the assignment was made or the power exercised. If the qualifying transfer occurs at a later time聽but before 6 April 2025, then the assignor or power holder must not have been a formerly domiciled resident at the time the assets moved to T2바카라 사이트�(as well as being non-domiciled at the time of the assignment or exercise).바카라 사이트�바카라 사이트�聽
Consult with바카라 사이트疶echnical바카라 사이트痑t an early stage if the facts are not clearly covered by the guidance above including situations where there are transfers after 22 July 2020 that may be affected by earlier trust-to-trust transfers or where the analysis may depend on the effect of the judgment in바카라 사이트疊arclays Wealth v HMRC (2017) EWCA바카라 사이트�Civ聽1512.聽