On 30 March 2017 the UK Government published its White Paper on the proposed Great Repeal Bill. The White Paper focuses on the legal changes that will result from the UK's exit from the EU. We have summarised the key features of the White Paper. Since then of course, a General Election has been called for 8 June 2017.

The White Paper explains that the intention of the current UK Government is to ensure that existing EU law is embedded in UK domestic law. The Westminster Parliament (and, where appropriate, the devolved legislatures) will, in due course, be able to decide which elements of that law to keep, amend or repeal once we have left the EU.

On the face of it, this may provide some comfort to EU nationals in the UK since their right to live and work here is an aspect of EU law, which will be transposed to UK domestic law. The removal of their right to stay in the UK would require legislation.

However, the question of whether EU nationals will be entitled to remain in the UK will be one of the key negotiating issues for the EU27, while the entitlement of UK nationals to remain living and working in the EU will be important from a British perspective. The terms of any deal and its related impact remains to be seen. Free movement is also proving to be a battleground in the upcoming General Election.

One possible outcome of the Brexit negotiations will be that EU nationals will lose their right to continue to live in the UK. In that event, Westminster legislation might follow quite quickly. Certainly, the White Paper does envisage a separate Immigration Bill being passed in addition to the Great Repeal Bill.

If you are anxious to preserve your current status you may wish to consider applying for British citizenship. Brodies has published a guide that provides an overview of the rules on eligibility and the application process.

British citizenship

Before applying for British citizenship, you should consider what impact this will have on your current domicile status for the purposes of UK personal taxes. Your domicile is distinct from your residence. Domicile is (putting it simply) where you have your permanent home. Many, and indeed any, elements are taken into account in determining domicile. British citizenship is not a determinant on its own but would be one such factor among others, such as your stated intentions, where your family, social ties, finances and any businesses are located, and whether you have a house outside the UK.

UK taxes

If you are UK resident but not UK domiciled, you may be "claiming the remittance basis" and therefore only paying UK tax on income or gains brought into the UK. Applying for British citizenship may prejudice that non-UK domicile status as it would be part of the evidence of your intention to reside here permanently. This may bring your worldwide income and gains into the UK tax net. Further advice would be required.

If you are not UK domiciled then the UK will only charge inheritance tax ("IHT") on your assets that are in the UK. If you fall within the UK IHT net then your worldwide assets will be subject to UK IHT. You are legally UK domiciled for the purposes of UK IHT if you are domiciled in the UK for the three years immediately preceding an IHT event such as death or making gifts to certain trusts. You would also be deemed UK domiciled for UK IHT if you have been resident in the UK for 15 out of the last 20 tax years. If you apply for British citizenship then that gives you a link with the UK, which may result in you residing in the UK for 15 years and then being deemed UK domiciled. British citizenship may also be used as a factor in determining that you are legally domiciled in the UK. In either case, your worldwide assets would be charged to UK IHT. Further advice is therefore required on the impact on your domicile of applying for British citizenship.

EU related UK tax reliefs

There are certain reliefs from UK tax which apply due to the requirements to secure compatibility with EU rules on free movement:

  • Relief from UK IHT on the value of agricultural property currently extends beyond such property situated in the UK (plus the Channel Islands and the Isle of Man) to property situated in the European Economic Area (the "EEA"). Hold-over relief from capital gains tax, which allows the tax on a rise in value to be delayed, is also allowed on agricultural property in the EEA.
  • UK tax reliefs on a gift to charity, whether during lifetime or on death, can extend to charities situated in the EEA.
  • If you are a citizen of the EEA but not a UK resident and receive UK income then you currently enjoy a UK income tax personal allowance.

The White Paper states the intention that EU law will be transposed into UK law, in so far as is practical to do so. However, where legal rules depend on cooperation with other EU states then it may be that they are not transposed directly into domestic law on Brexit. Even if they are, they may later be amended or repealed.

EU succession regulation

There has been some debate about the applicability to the UK of the EU Succession Regulation, given that the UK did not sign up to it, and we are now exiting the EU.

If you are Scottish and have heritable property (i.e. houses, land and buildings) situated abroad then Scots law says that property will be dealt with on your death according to the rules of the country in which it is situated. If that foreign country has forced heirship rules, those rules might apply to the property, regardless of the provisions in your will. This may, for example, prevent you from leaving the whole of that property abroad to your spouse. There are no such forced heirship rules in Scotland for houses, land and buildings. It is therefore preferable in many cases for Scots law to apply.

If the property is situated in any of the EU countries that have signed up to the EU Succession Regulation, then the law of habitual residence (Scotland) applies. Despite Brexit, the Regulation still allows a person habitually resident in Scotland to elect in their will that the law of Scotland will apply to houses, land and buildings situated in a country that has signed up to the Regulation. Before the Brexit vote we advised clients to take advantage of the Regulation and to elect that Scots law applies to the property abroad, to avoid forced heirship rules.

This is still the case and we would continue to recommend that clients take advantage of the current rules. However, specific advice according to the circumstances will be required.


Brexit brings scope for changes that may impact individuals, and many questions remain unanswered. As matters develop, considered advice will be required.

If you have any questions, please get in touch with your usual Brodies contact, or one of the individuals below.

Key conatcts

Mark Stewart

Leigh Gould

Visit our Brexit Hub for regular updates on Brexit - personal tax and succession and Brexit - personal tax and succession - European holiday home.


Mark Stewart

Head of Personal & Family and Partner

Leigh Gould