Domicile and Inheritance UK (2026): How Domicile Affects Your Will, IHT & Intestacy

Domicile is the country that the law regards as your permanent legal home — the place you intend to live indefinitely and return to if you go abroad. It is different from: nationality (the country of your passport); residence (where you currently live); and habitual residence (a concept used in EU law). Domicile matters for inheritance in three ways: (1) IHT — UK-domiciled people pay IHT on their worldwide assets; non-domiciled people only pay IHT on UK assets; (2) which law governs your will — in England and Wales, the law of domicile determines the validity of the will and the rules of intestacy; (3) the spouse IHT exemption — a non-domiciled surviving spouse only gets a capped £325,000 exemption, not the unlimited spouse exemption.

English law recognises three types: (1) Domicile of origin — acquired at birth; you take your father's domicile (if parents are married) or your mother's domicile (if parents are not married). It follows you throughout life unless replaced, and 'revives' if you abandon a domicile of choice without acquiring another. (2) Domicile of choice — acquired by living in a country with the settled intention of remaining there permanently or indefinitely. Both elements are required: physical presence AND intention. A temporary stay, however long, does not create a domicile of choice. (3) Domicile of dependency — applies to children (under 16) and married women before 1974; a child's domicile follows the father's automatically.

UK-domiciled individuals pay IHT on their worldwide assets at 40% above available nil-rate bands. Non-domiciled individuals only pay IHT on their UK assets (UK property, UK bank accounts, UK investments). Non-UK assets of a non-domiciled individual are completely outside UK IHT. However, HMRC uses a concept of 'deemed domicile' for IHT: if you have been UK-resident for 15 out of the last 20 tax years (from 6 April 2025 the rules were updated — always check current deemed domicile rules), HMRC treats you as UK-domiciled for IHT purposes even if you have not acquired a domicile of choice in the UK. This means long-term UK residents who still consider themselves non-domiciled may face full worldwide IHT without realising it.

Under English private international law (and the EU Succession Regulation for EU assets), the starting point is: (1) Immovable property (land, buildings) is governed by the law of the country where it is located — the 'lex situs'. So a French villa in your English will is governed by French law, regardless of your domicile. (2) Movable assets (cash, shares, personal property) are governed by the law of your domicile at death. This creates a problem: an English will that is perfectly valid in England may not comply with French formalities for the French property. The solution is typically to have two wills — an English will for UK assets and a local will for foreign property — drafted by lawyers in each jurisdiction to avoid conflict.

If you die domiciled in another country, English law governs your UK immovable property (land, property) and the law of your foreign domicile governs your UK movable property (cash, shares, personal belongings). Your foreign-domiciled will can deal with UK property — but it must be in a form that English law will recognise as valid. Under the Wills Act 1963, a will is formally valid in England if it complies with the law of: where it was made; where the testator was domiciled when they made the will or at death; where the testator habitually resided when they made the will or at death; or (for immovable property) where the property is located. HMRC will require UK IHT to be paid on UK assets (and potentially worldwide assets if deemed domiciled).

Acquiring a domicile of choice abroad requires both physical presence in a new country AND a clear, settled intention to live there permanently or indefinitely — not just temporarily or for a fixed period. Evidence courts look for: selling your UK home, acquiring a home abroad, terminating UK employment and starting abroad, joining local social and civic life, making a foreign will, updating your financial affairs to the new jurisdiction, expressing clear intention in writing. HMRC scrutinises domicile changes carefully and looks at all the facts, not just the testator's stated intention. Simply living abroad for tax reasons without the genuine intention to remain permanently is unlikely to succeed. Professional legal advice is essential before relying on a domicile change for IHT planning.

It is strongly recommended, though not always legally required. A single English will can technically deal with foreign property — but it may need to be 'resealed' or recognised in the foreign jurisdiction, which can be slow and expensive. A local will for each country's property, drafted by a lawyer in that jurisdiction, avoids these delays and ensures the will complies with local formal validity requirements. The two wills must be carefully coordinated: the English will should contain a clause limiting it to UK assets; the foreign will should likewise be limited to foreign assets. If they are not coordinated, one will may inadvertently revoke the other. Having both wills reviewed by specialists in both jurisdictions is best practice for anyone with significant cross-border assets.