Overseas connection - when the testator is based overseas

If you are not based in the UK, a UK will that applies to your worldwide assets may not be appropriate, and you should obtain specialist advice.

There is an important difference between a testator being domiciled outside the UK and simply being resident outside the UK. So far as inheritance tax is concerned, the more important question is domicile. 

  • If a testator is domiciled in the UK, they will pay inheritance tax on their worldwide estate.
  • If a testator is not domiciled in the UK, they will only pay inheritance tax on their assets that are situated in the UK.

It is possible to be domiciled in the UK but resident abroad. If this is the case, your worldwide estate will be subject to inheritance tax. A UK will may be appropriate, but you may also need specialist advice (and possibly a will governed by another jurisdiction) if you own assets outside the UK.

Domicile is a complicated concept, and it is not simply based on where you live or the country of which you are a national or citizen. Instead, it is the jurisdiction with which you are most closely connected and where you intend to reside indefinitely. For many people this is not clear cut and there can be confusion over their domicile status. 

As from 6 April 2017, if you have lived in the UK for 15 out of the last 20 years, then you will be known as being ‘deemed domiciled’ in the UK for inheritance tax purposes. This is the case even if you do not intend to live in the UK indefinitely. The effect of being deemed domiciled in the UK is that, even if you are actually domiciled in another country, you will be liable to pay inheritance tax on your worldwide assets.

As from the same date, there is a new category known as a formerly domiciled resident. In brief, this describes a person who used to be domiciled in the UK, has since acquired another non-UK domicile but is resident in the UK again at the relevant time. This may have an effect on the property which is subject to inheritance tax.

If you are based overseas, or believe there is some doubt over your domicile status, you should obtain specialist advice to ensure your will or wills are structured appropriately.

For more information, please see our page Who pays inheritance tax?