Is domicile still relevant for Inheritance Tax (IHT) when a Double Taxation Treaty is involved?

For decades, the concept of domicile has been a cornerstone of the UK tax system, particularly for Inheritance Tax (IHT). In simple terms, your domicile is the country you consider your permanent home — the place you ultimately belong, even if you live abroad for many years. Everyone acquires a domicile of origin at birth (usually their father’s), but it can be replaced by a domicile of choice if you move abroad and intend to live there permanently.

Until recently, domicile determined how far the UK’s IHT rules reached. UK-domiciled individuals were subject to IHT on their worldwide assets, while those who were non-UK domiciled (so-called ‘non-doms’) only paid IHT on their UK assets. This made domicile central to estate planning for internationally mobile individuals.

From April 2025, the Government replaced the ‘domicile-based’ IHT regime with one based on residence. Under the new rules, individuals who have been UK tax-resident for at least 10 years will be within the scope of IHT on their worldwide estate, known as long-term residents for IHT. This change aligns IHT more closely with other UK taxes, such as Income Tax and Capital Gains Tax (CGT), the majority of European countries’ IHT regimes, and it removes the often-complex question of whether someone has truly severed ties with their country of origin.

But what role does domicile play now when we have a double tax treaty involved, mentioning this concept? 

Many people with international links worry about double taxation: the risk that their estate might be taxed in two countries on death. To prevent this, the UK has signed several double tax treaties dealing with IHT (or equivalent estate taxes), including treaties with countries such as France, Italy, India, and the USA.

These treaties often include tie-breaker rules to decide which country has primary taxing rights, and those rules still rely on the concept of domicile, not residence. How must the concept of domicile be interpreted following the new UK changes when a double tax treaty comes into play?

HMRC has published guidance on their IHT Manual, establishing that from 6 April 2025, where a double tax treaty refers to whether the UK treats a person as UK domiciled for IHT purposes, a person will be treated as so if they are a long-term UK resident. Therefore, the UK has shifted to a UK tax residence system from an IHT perspective, even in the international sphere. 

If you have any queries about cross-border taxation, please do not hesitate to contact our private client team. 

Roger Longarón is a tax adviser in both the private client team and Spanish law team. He advises high-net-worth individuals and international families on UK and Spanish tax, succession, and cross-border estate planning. A Spanish-qualified lawyer and UK tax adviser (ATT), he provides clear, practical advice to clients with connections to both jurisdictions.