Non-UK domiciled individuals are charged IHT on what?

Non-UK domiciled individuals are charged Inheritance Tax (IHT) on UK assets only. This means that if an individual is not considered to be domiciled in the UK, they will only be liable for IHT on the assets they own within the UK borders and not on their global assets.

The rationale behind this is that the UK tax system differentiates between residents and non-residents, particularly regarding domicile status. Domicile refers to the country that a person treats as their permanent home, and it plays a crucial role in tax obligations. For non-UK domiciled individuals, the UK government imposes tax on UK-based property and assets, which can include real estate, investments, and other forms of tangible and intangible property situated in the UK.

As a result, only those assets that are physically in the UK will be subject to IHT for non-domiciled individuals, whereas their overseas assets would remain exempt from this particular tax. This distinction is important for understanding tax liabilities for individuals with ties to multiple countries.