UK citizen with non UK wife..... Will advice problems

Dookdik17095

I have spoken with 5  different Solicitors  about my new will and have 4 different opinions !!!

im 70 years old  UK citizen    my wife of 29 years is not a UK national ,or UK domiciled , she has property overseas , our daughter  is a UK national .. My UK estate  is probably in the region of £650,000 including a £450,000 family home .

I now need to make a new will  but am being told that, i can leave my property to my Daughter  tax free up to £500k  but the remaining  amount will be taxed at 40% as my non UK  wife  has no tax status in UK ,,, However I do not want this  I want  to split my estate equally between my wife and daughter   and  not pay IHT 

I no longer trust the solicitors opinions as they   are not consistent .... Some have said I need to set up a discretionary trust ?, others have said I can leave it all to my Wife  Tax free ??  or I can  reduce my UK estate to  less than £500k by sending excess money to my wifes domicile  and a few other suggestions ???

I am confused and trying to make the best plan  for the future ...I spend most of my time in UK  and my wife spends up to 6 months here seeing our grand children

sheramber

You can read about the inheritance rules here

https://www.gov.uk/inheritance-tax

Keep_pedalling

I am afraid what you want is not possible because spousal exemption does not apply in your unusual situation. You could make gifts to your wife and daughter to reduce the value of your estate but you would need to survive 7 years for this to work. 

bobster2

Rules changed on 6 April 2025...the concept of long-term UK residence is replacing domicile when it comes to spousal exemptions for IHT...

IHTM11033 - Spouse or civil partner exemption: spouse or civil partner domiciled outside UK

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm11033

IHTM47030 - Long-term UK residence: Spouse or civil partner exemption: Not a long-term UK resident

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47030

poseidon1

Dookdik17095 said:

I have spoken with 5  different Solicitors  about my new will and have 4 different opinions !!!

im 70 years old  UK citizen    my wife of 29 years is not a UK national ,or UK domiciled , she has property overseas , our daughter  is a UK national .. My UK estate  is probably in the region of £650,000 including a £450,000 family home .

I now need to make a new will  but am being told that, i can leave my property to my Daughter  tax free up to £500k  but the remaining  amount will be taxed at 40% as my non UK  wife  has no tax status in UK ,,, However I do not want this  I want  to split my estate equally between my wife and daughter   and  not pay IHT 

I no longer trust the solicitors opinions as they   are not consistent .... Some have said I need to set up a discretionary trust ?, others have said I can leave it all to my Wife  Tax free ??  or I can  reduce my UK estate to  less than £500k by sending excess money to my wifes domicile  and a few other suggestions ???

I am confused and trying to make the best plan  for the future ...I spend most of my time in UK  and my wife spends up to 6 months here seeing our grand children

Estate planning  between UK domiciled and non UK domiciled individuals is a particularly complex area of tax planning, often way beyond the competency of  typical high street firms of solicitors so not at all surprised you have been getting conflicting advice.

Matters have been made worse, following the Labour Party  introducing amendments to the 'deemed domicile' rules for IHT purposes in the last Autumn budget .

There are therefore factual tests to ascertain your wife's domicile for IHT purposes which would involve looking back over the last 20 years to determine if she had in the past already acquired a UK deemed domicile by virtue of passage of time.

If this proves to be the case, on the one hand you are free to leave as much as you like to her in your will completely IHT free via the unlimited spouse exemption, but on the other hand she herself on her death  becomes liable to UK  IHT on a worldwide basis, therefore potentially  a double edged sword depending on the extent of your wife's wealth outside the UK.  

Prior to April this year, if your spouse had been tax resident in the UK for 15 out of the last 20 years she would automatically become deemed domicile for all tax purposes ie income tax, CGT and IHT.

In the Autumn budget last year Labour amended this provision to 10 out of the last 20 years, which has understandably resulted in a mass exodus of very wealthy non doms.

In view of the above, what I feel you should consider is whether as a question of fact, your wife had (prior to April 2025)  already become UK deemed domicile ( assuming she was present here until your children became adults), and that the deeming provision remain active by virtue of the strong ties she maintains here coupled with her annual visits. 

Her having become  and remaining UK deemed domiciled is only an issue if her foreign assets together with your own, substantially exceeds £1 million in total.

 Incidentally in this scenario it would be far more IHT efficient for you to leave all your assets to her (perhaps in a life interest IPDI trust), to preserve your nil rate bands so that she can then pass up to £1 million to the children IHT free on her death.  She always has the additional  option after your death to make substantial personal gifts to you children and then survive 7 years thereafter, such gifts could include releasing to them assets held in the life interest trust on her behalf.

Please note, even if on  the facts your wife is non UK dom for tax purposes, the IHT rules had been further amended  (in 2013)  to allow the non dom spouse to elect to be treated as UK dom for IHT purposes on death of the UK Dom spouse and in that way benefit from the unlimited spouse exemption - see article below

https://www.streathers.co.uk/the-recent-budget-and-its-impact-on-the-inheritance-tax-iht-spouse-civil-partner-exemption/


You undoubtedly need an accurate and informed appraisal of your joint estate position with your wife, I feel it would be a mistake for you to look at this as one sided process since there are options also open to your wife to mitigate your joint IHT exposure going forward. 

As to professional advice, if any of the solicitors you approached covered all of the points and options I raised  above and this was in writing  (hopefully in far more detail than I have covered here) then it may make sense to go back to them ( with your wife) to flesh out a feasible course of action.

If not, all I can say is that there is a substantial pool of expertise in non dom tax planning matters  available from mid to top tier firms of Chartered Accountants and Solicitors in the London area. Some of these firms have offices in the larger cities. Many will have tax Practitioners who are also members of STEP ( THE SOCIETY OF TRUST AND ESTATE PRACTITIONERS). See link below to the STEP directory which might assist in sourcing an appropriate adviser - 

EDIT - STEP link overlooked

https://www.step.org/about-step/public?gad_source=1&gbraid=0AAAAADu2MSp1Vp86xu216C-FuSAwsgiEX&gclid=Cj0KCQjwqv2_BhC0ARIsAFb5Ac8cRCUgrJOFZV3RKdZGXZt9_AEMO6xoCNO7rU8w6GAwLdEPCIc6qMsaAqDXEALw_wcB

Dookdik17095

Thanks Poseidon ,, we have firmly established  that my wife is deemed non domicile in UK for any of last 27 years    , And that she has no liabilities or entitlements to UK taxation..   which if I read the above information correctly means I can pass my estate to her IHT free , she has never been UK domiciled ..

poseidon1

Dookdik17095 said:

Thanks Poseidon ,, we have firmly established  that my wife is deemed non domicile in UK for any of last 27 years    , And that she has no liabilities or entitlements to UK taxation..   which if I read the above information correctly means I can pass my estate to her IHT free , she has never been UK domiciled ..

If you are certain your spouse is not and never has been deemed UK domiciled for IHT purposes (which actually would have been helpful), then you are solely limited to your nil rate band  (£325k)  in terms of what you can pass to her IHT free. So she is therefore exposed to IHT  on whatever she inherits from you above this. It will therefore be up to her in future ( assuming she is aware ) to avoid the impact of this by making the appropriate election.

Evidently you have not understood my explanation, and given the other conflicting ( paid for?) professional  advice you say you have received,  you presumeably remain none the wiser with regard to your estate planning going forward.

However, hopefully my summation may have proven helpful to others who may have the misfortune ( from a UK IHT perspective) of being in a mixed domicile marriage.