IHTM47037 - Long-term UK residence: Spousal long-term UK residence elections – the date the election takes effect
Source: gov.uk (2025-04-07)


The rules for spouse elections prior to 6 April 2025 can be found at IHTM13040 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm13040) – IHTM13049 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm13049).

Both a lifetime and a death election (IHTM47032 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47032)) must contain the date from which the election is to take effect, IHTA84/S267ZD(2).

That date must be:

after 5 April 2025, IHTA84/S267ZD(2)(a), and

be within a period of:

in the case of a lifetime election, seven years of the date of the election, IHTA84/S267ZD(2)(b)(i),

in the case of a death election, seven years of the deceased’s death, IHTA84/S267ZD(2)(b)(ii).

In addition, IHTA84/S267ZD(3) says that at the date on which the election is to take effect, the person making the election must have been married to, or in a civil partnership, with a person who was a long-term UK resident (IHTM47000 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47000)) at that time. Note that there is no requirement for that person to be a long-term UK resident throughout the period from which the date the election takes effect until the date the election is made. The person making the election does not need to be married or in a civil partnership when the election is made (IHTM47032 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47032)).

A consequence of this is that if a person who is long-term UK resident and does not make an election and makes a gift to their non-long-term UK resident spouse or civil partner before 6 April 2025 and dies within seven years, the £325,000 limit that applies before that date continues to apply (IHTM11033 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm11033)).

Example 1 (Lifetime)

In May 2025, Sandra, who was a long-term UK resident gifts £1,000,000 to her civil partner Carol, who was not a long-term UK resident. Of this gift, £325,000 is exempt under IHTA84/S18(2), and £675,000 is a potentially exempt transfer (PET) until 7 years have passed from the date of the gift. Sandra dies in 2027 and the gift is now a failed PET (IHTM04057 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm04057)) and after deduction of the current nil rate band (£325,000), £350,000 will be subject to tax

£1,000,000 - £325,000 = £675,000 - £325,000 = £350,000 x 40% =£140,000

If Carol makes a valid election to be a long-term UK resident within 7 years of the date of the gift, the full amount of the gift will be spousal exempt and the nil rate band will be available to use against the remainder of the estate.

Example 2 (Death)

Brian was a long-term UK resident and dies on 15 May 2028. He made lifetime gifts of £325,000 to his children in the 7 years before his death.

In Brian’s Will, he leaves £800,000 in cash to his wife Amy who is not a long-term UK resident at the date of Brian’s death.

On the 12 September 2028, Amy makes an election to be treated as a long-term UK resident. The conditions of S267ZC are satisfied and the election is accepted.

As a result, the £800,000 left to Amy in Brian’s Will is fully spousal exempt and no inheritance tax is payable.

If the election was not made, then the spousal exemption is restricted to an amount equal to the nil rate band, currently £325,000. In addition, the nil rate band is available, but in Brian’s case this is applied in the first instance to lifetime gifts. Therefore, the remainder of the legacy to his wife Amy will then be subjected to inheritance tax

£800,000 - £325,000 = £475,000 x 40% = £190,000