This Content Was Last Updated on January 9, 2016 by


Article contributed by ACCA

The IHT-exempt amount that can be transferred to non-UK domiciled spouses and civil partners will increase.

New legislation will be introduced in the Finance Bill 2013 to increase the inheritance tax (IHT) exempt amount that a UK-domiciled individual can transfer to their non-UK-domiciled spouse or civil partner.

Under current legislation transfers of assets between spouses and civil partners, whether gifts made during a person’s lifetime or transfers of assets at the time of death, are generally exempt from IHT. But where the spouse or civil partner to whom the assets are transferred does not have a UK domicile there is a lifetime limit cap of £55,000.


Legislation will be introduced in the bill to reform the IHT treatment of transfers between a UK-domiciled individual and their non-UK-domiciled spouse or civil partner in two ways:

  • the cap will be increased to the level of the prevailing nil-rate band level
  • non-UK-domiciled spouses or civil partners will be able to elect to be treated as UK domiciled for IHT purposes.


Individuals who choose to make an election would benefit from uncapped IHT-exempt transfers from their spouse or civil partner, but subsequent disposal by them would be liable to IHT (subject to their own nil-rate band), irrespective of the location of the assets.

The election will only affect an individual’s treatment for IHT purposes. Election will need to be made at any time after marriage or registration of the civil partnership. Elections that follow a death will only be valid if made within two years of the death. The electing spouse would be able to choose a date the election applies from going back up to a maximum of seven years so that any lifetime gifts during that period are covered by the election.

Election will be irrevocable while the electing individual continues to remain resident in the UK. An election will cease to have effect if the electing person is resident outside the UK for more than four full consecutive tax years.