International Tax
If your estate is approaching or already over £325,000, then you need to make time to consider your options.
Most expats are aware that in the event of your death, your estate will be transferred to your legal heirs and beneficiaries. However, few realise that despite living outside of the UK for many years, your estate can still be liable to UK Inheritance Tax at a rate of 40%.
Inheritance Tax
Inheritance Tax (IHT) is based on domicile, it is not connected with your residency.
Therefore, the amount of time you may have been living in another country does not necessarily matter to HMRC. Even if you are not liable to pay UK income or capital gains tax, you may still have to pay UK inheritance tax (IHT).
Domicile
Determining one’s domicile can be a complex area of financial planning. As such, it is essential to carry out appropriate estate planning in advance to avoid inheritance tax. Furthermore, in the event of your death, this prevents your beneficiaries from dealing with HMRC over a relatively complicated area of tax.
For example, any gifts are given IHT planning within the seven years before your death can be subject to IHT. As such, you would ideally have made your IHT plans long before this period.
Estate Planning
Estate planning is not a high priority if your total estate is worth less than £325,000 (or £650,000 as a married couple) and you do not see your estate increases in value.
If your estate is approaching or already over £325,000, then you need to make time to consider your options.
The earlier you focus on estate planning, the longer you have to organise your affairs in a tax-efficient way.