Domicile Planning: A Strategic Guide for the Internationally Mobile

Why domicile matters

For decades, domicile was the single most important factor in UK inheritance tax: a UK-domiciled individual — wherever they lived, whatever their nationality, however many decades abroad — had UK IHT applied to their worldwide estate. That changed on 6 April 2025. From that date the UK moved to a residence-based IHT regime, and domicile and deemed domicile no longer determine whether your worldwide estate is exposed to UK IHT.

Under the new rules, the dividing line is whether you are a long-term resident — broadly, UK tax resident for at least 10 of the previous 20 tax years (see below). A long-term resident is within UK IHT on their worldwide estate; an individual who is not a long-term resident is generally subject to UK IHT only on UK-situs assets: UK property, UK bank accounts, shares in UK companies. The difference can still be a 40% charge on a global fortune versus a 40% charge on only the UK-located portion.

Domicile nevertheless remains a live legal concept. It continues to matter for general law — including succession, the validity and interpretation of wills, marriage and matrimonial proceedings — and historic domicile positions remain relevant to trusts and arrangements established before April 2025. For high-net-worth individuals with internationally diversified assets, understanding both the new residence test and their underlying domicile position is essential.

The three types of domicile

Domicile of origin is acquired at birth. For a person born to married parents, the domicile of origin is the father's domicile at the date of birth. For a person born to unmarried parents, it is the mother's domicile. The domicile of origin has a "tenacious" quality in English law: it revives automatically if a domicile of choice is abandoned without a new one being acquired.

Domicile of dependence operates for children under 16. Until they reach that age, a child's domicile changes automatically to follow the domicile of the parent on whom they are legally dependent (generally the father for legitimate children). A child's domicile of dependence is not a separate concept from the domicile of origin in most contexts — it is simply that the child's domicile is derived rather than independently acquired.

Domicile of choice is the only domicile that an adult can actively acquire. To acquire a domicile of choice, two conditions must be met: (1) you must actually reside in the new country; and (2) you must have a genuine, settled intention to live there permanently or indefinitely, without any intention of returning to the country of origin.

The intention element is crucial and far-reaching. It is not enough to live in the new country for many years. You must genuinely intend it as your permanent home. Courts look at all available evidence: have you transferred your assets abroad? Have you applied for citizenship? Have you abandoned professional connections to the UK? Is your family there? Where do you wish to be buried? What do you say in private correspondence about where "home" is?

The difficulty of losing UK domicile

English domicile law is notoriously resistant to individuals claiming to have lost their UK domicile of origin. Historically, HMRC contested domicile changes on death estates with considerable resources, because the IHT stakes were high. Since 6 April 2025 domicile no longer determines worldwide IHT exposure (that is now the residence-based long-term resident test), but domicile remains decisive in general law — for succession, wills, and family matters — so the principles below still matter, and historic domicile positions remain relevant to pre-April 2025 trusts and arrangements. Successful cases of losing UK domicile of origin do exist — but they typically involve individuals who emigrated decades earlier, have genuinely abandoned all meaningful connection to the UK, have acquired citizenship in the new country, and have maintained consistent contemporaneous documentation of their intention.

Common mistakes that prevent a successful domicile change:

Maintaining a UK property — even a small flat "for when I visit." Courts treat this as evidence of an intention to return.

Remaining a member of UK clubs, institutions, or professional bodies.

Having elderly parents in the UK and expressing an intention to return if they need care.

Saying in correspondence or professionally that you "may return to the UK one day."

Making UK-centric investments or planning.

Failing to take local citizenship in the new country when it was available.

None of these is individually fatal, but together they build a picture that HMRC will use to argue that no genuine, settled intention to remain abroad permanently existed.

Deemed domicile: the former 15-of-20 rule (historical)

Until 5 April 2025, even a genuinely non-UK-domiciled individual could be treated as UK-domiciled for IHT purposes if they had been UK-resident for at least 15 of the previous 20 tax years. This was "deemed domicile," and once triggered it brought worldwide assets within UK IHT.

Deemed domicile was abolished from 6 April 2025, when section 267 of the Inheritance Tax Act 1984 was repealed. It no longer exists as a live test. The 15-of-20 rule is set out here only because it remains relevant to the historic position of trusts and arrangements established before April 2025, and to transitional cases. The current dividing line is the residence-based long-term resident test described below.

The residence-based IHT regime (from 6 April 2025)

The April 2025 reforms had two distinct strands. For income tax and CGT, the remittance basis and non-dom regime were abolished and replaced by the four-year Foreign Income and Gains (FIG) regime, which exempts qualifying foreign income and gains of new arrivers for their first four years of UK residence.

Separately, and from the same date, the domicile-based IHT test was replaced by a residence-based test. An individual who is a "long-term resident" — broadly, UK tax resident for at least 10 of the previous 20 tax years — is subject to UK IHT on their worldwide assets. The effect persists for a period after leaving the UK (a "tail"): those resident for 10 to 13 years fall outside worldwide IHT after three tax years of non-residence, with the tail extending up to a maximum of 10 years for those resident for 20 years or more. Domicile and deemed domicile no longer determine worldwide IHT exposure.

The key message for planning purposes is that the focus has decisively shifted from domicile to residence duration. Individuals who are approaching, or have passed, the 10-year long-term residence threshold should model the IHT implications carefully and take advice on the optimal timing of any international relocation, including how the post-departure tail affects exposure. (Note also that from 6 April 2027, unused pension funds are brought within the scope of IHT under separate legislation — a further reason to review estate exposure.)

Scots law: a note

Domicile is a concept of general UK law, broadly the same in Scotland as in England and Wales. However, there are procedural differences in Scottish succession law — the "prior rights" and "legal rights" (legitim) of a Scottish deceased's family may affect how assets pass, regardless of the will. Scottish estate assets should be reviewed with Scots law advice.

Practical planning steps

If you are considering changing domicile, begin building a contemporaneous record of intention from day one: a letter written to your solicitor setting out your intention to reside permanently abroad, the reasons for your move, and a statement that you intend to make the new country your permanent home. Review and update this annually.

Consider taking citizenship in the new country when it becomes available. This is one of the strongest indicators of permanent intention.

Review UK ties systematically: memberships, property, investment accounts, pension arrangements, professional registrations. Eliminate UK connections that are not essential.

Take advice on excluded property trusts. Under the rules in force from 6 April 2025, whether non-UK assets settled into trust are "excluded property" (and so outside UK IHT) generally turns on whether the settlor is a long-term resident at the relevant time, rather than on domicile. Assets settled while the settlor is not a long-term resident may remain outside the UK IHT net, but the position can change as the settlor's residence history evolves, and trusts established before April 2025 are subject to transitional rules. The window for this planning is critical and the analysis is now residence-based — specialist advice is essential before settling assets.

Tax law in this area is complex and changing rapidly. Always take specialist legal and tax advice on domicile planning. This guide is for information only.

How Global Investments can help

Global Investments advises internationally mobile clients on the interaction of domicile, residence, and IHT — and on structuring assets and trusts to manage the IHT exposure of internationally diversified estates. We work with specialist domicile lawyers and cross-border tax advisers to provide coordinated advice for clients approaching the long-term residence threshold, managing the post-departure IHT tail, or addressing the general-law domicile questions that still arise in succession and family matters. Contact our international planning team to discuss your situation.