IHT and Domicile

wyattjnr

Hello all, so my mothers probate is throwing up questions that my sister and I had never considered.  Just as a bit of a quick background. My mum was born in the UK, but moved over to Ireland in 2019 when her dementia became too much and she needed the support of my sister who lives in Ireland.  She eventually went into a home in Aug 2020 and stayed there until her passing in June 2024.
We had always based the logic that she was still a resident of the UK, with all her assets in the UK, however the question of where she was domiciled has been asked and whilst the UK is domicile of birth, this can actually be replaced by Domicile of Choice which in this case would be Ireland.
All my mothers assets are in the UK and I live in the UK, so we are trying to work out which country we pay the IHT or CAT to?  As far as I am aware my mother never paid income tax in Ireland but not sure if that makes any difference.
Are there any international Tax experts that can give us some guidance please.

RAS

Was your mother widowed or divorced?
Owned or previously owned property, or not?
Leaving house or value to descendants? 

Rough value of estate?

wyattjnr

Divorced, sold her property in 2019 before moving to Ireland so money is in the UK bank, 2 beneficiaries (me and my sister at 50/50).
950k

RAS

Ok, so in England and Wales, mum's estate would have the basic £325k allowance and the residential allowance of £175k. Obviously the funeral costs and probate costs are paid first. Beyond that IHT is 40%. 

Scotland and NI may have different IHT rules and confirmation in Scotland is quite different to probate in England.

Keep_pedalling

It sounds like she was resident in ROI but still domiciled in the UK. With no assets in the ROI then I am pretty sure her estate falls entirely under UK law, although you might want to take professional advice considering how much is involved. 

user1977

RAS said:

Scotland and NI may have different IHT rules

IHT isn't devolved, it's the same in all the home nations.

poseidon1

Keep_pedalling said:

It sounds like she was resident in ROI but still domiciled in the UK. With no assets in the ROI then I am pretty sure her estate falls entirely under UK law, although you might want to take professional advice considering how much is involved. 

Agree, if all cash in UK banks at death and nothing at all in ROI, then due to mum's 'sticky' UK domicile of origin for IHT purposes, UK has sole domain In respect of any death duties that maybe in point.

However as well to note that under ROI's Capital Acquistion Tax (CAT) which taxes the recipient beneficiary  , if mum had retained an appreciable cash float in an Irish bank whilst resident there, ROI imposes CAT by reference to the deceased's physical  residence status at death and imposes CAT on any assets  (subject to a de minimus for cash ) held in ROI at that point.

The beneficiary/beneficiaries caught by CAT must therefore fall back on UK /ROI double tax agreements to try and claw back a credit for CAT paid against any UK IHT liabilty imposed. However, if no UK IHT due  then the CAT would seem to be a net irrecoverable loss from the beneficiaries' perspective ( see link below to ROI Revenue guidance on operation of the double tax relief  ).

Maybe not an issue in the OP's particular circumstances, but worth noting for other cross border ROI/UK families in a similar predicament.


https://www.revenue.ie/en/gains-gifts-and-inheritance/credits-you-can-claim-against-cat/double-taxation-relief-uk.aspx