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Navigating UK Inheritance Tax For Overseas Investors

A comprehensive guide for non-residents ...


Posted by Helen Beaumont on 04/10/2023 @ 8:00AM

With its robust legal framework for property transactions, the UK continues to be a magnet for overseas investors. However, many non-residents overlook or misunderstand the intricacies of the UK's Inheritance Tax (IHT) ...

Inheritance Tax can be levied upon death or during lifetime transfers!

Inheritance Tax can be levied upon death or during lifetime transfers!

copyright: scouser uk / pixabay

For non-UK residents who are also non-domiciled, IHT is only applicable to UK-based assets, such as properties or bank accounts. However, the concept of domicile is crucial. If an individual has lived in the UK for 15 of the last 20 years or had a permanent home in the UK at any point in the last three years of their life, they could be treated as UK-domiciled.

"This means their global assets would be considered for Inheritance Tax in the UK!"

Before 2017, overseas investors could sidestep UK IHT by holding properties indirectly, such as through non-UK trusts or companies. However, changes in tax rules have rendered this strategy ineffective.

Regardless of domicile status, non-UK resident property investors can deduct the IHT nil rate band, currently set at £325,000, from their UK estate's value. If the UK assets are below this threshold, it's possible to transfer all or part of this nil rate band to a surviving spouse or civil partner.

A unique strategy to mitigate IHT in the UK involves the use of a Family Investment Company (FIC). This is a standard UK company with distinct entitlements and rights linked to different share classes. By introducing property into such a company, an overseas investor can effectively freeze their UK IHT share value, thus minimizing potential tax liabilities.

As with all tax matters, non-resident investors aiming to reduce UK IHT liabilities should consider the implications of various UK taxes and the tax regulations in their home country.

"Expert guidance is essential to navigate
this complex landscape!"

The UK remains a hotspot for overseas property investors, but understanding IHT is crucial. Domicile status plays a significant role in determining IHT liabilities. Innovative strategies can help mitigate IHT for non-residents.

Until next time ...



Would you like to know more?

If anything I've written in this blog post resonates with you and you'd like to discover more about Inheritance Tax especially if you are a non-resident overseas investor, it may be a great idea to give me a call on 01908 774323 and let's see how I can help.

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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.