Why Does Domicile Matter in Probate?

Domicile Matter in Probate

Domicile means the country you consider to be your permanent home. This might be different from your country of origin, or even the country in which you are living. In Probate, Domicile can have an impact on whether or not Inheritance Tax is payable to HM Revenue & Customs after death.

Estate Administration

When someone dies the administration of their Estate needs to establish all assets the deceased person owned prior to death; no matter where those assets are situated in the world. It is also necessary to consider the Inheritance Tax implications of owning foreign assets; and of course whether Inheritance Tax is payable on those foreign assets. The Executor or Administrator of the Estate will need to think about the deceased person’s ‘domicile’.

Domicile describes the country a person treats as their permanent home, or lives in and has a substantial connection with. A domicile can even be somewhere a person intends to return to, if they currently reside elsewhere. Domicile is different to residence. Residence is where someone lives, whereas domicile is where someone lives and/or intends to remain. If someone spends lots of time in Spain, but considers England as their main home, then England is their domicile. Another example of a domicile is if someone relocates to Australia, and has no intention of returning to the UK; then their domicile will be Australia.

Inheritance Tax

Whether or not Inheritance Tax is paid depends on whether a person is domiciled or ‘deemed domiciled’ in the UK. Deemed domiciled means that if a person is not domiciled in the UK, HM Revenue & Customs will generally still treat a person as being domiciled in the UK if certain conditions are satisfied.

More and more Britons buying second homes abroad or relocating to warmer climes. It is becoming increasingly common to live in one country, in addition to having assets or property in another.

If a deceased person was domiciled in the UK, Inheritance Tax is paid on all worldwide assets; including property, bank accounts and investments. If the deceased was domiciled outside the UK, then Inheritance Tax is only paid on assets held in the UK.

When someone domiciled outside the UK dies leaving assets in the UK, then a Grant of Probate must be taken out in England to deal with those English assets.

If Fisher Jones Greenwood can assist you in establishing where the deceased was domiciled or assist as to whether Inheritance Tax is payable, please contact us by calling 01206 700113 or email [email protected] to arrange a mutually convenient appointment.