bigtuk

It's been ages since I've come across anything worthy of posting but this article jumped out of the Sunday Times over my coffee and scrambled eggs. I have edited it heavily - other things to do - moving house again soon - but hope it helps someone and doesn't depress anyone!

'...Revenue & Customs thinks that many families are using their overseas homes to dodge inheritance tax and has warned that people could face prosecution and fines if they fail to declare them properly. ....... UK inheritance tax, which is levied at 40% on assets above £285,000, will apply to your worldwide assets, including your home, for as long as you remain "domiciled" in the UK. The law says you normally take the domicile of your father, and it is extremely difficult to revoke it even if you emigrate . (emphasis added)......"It's a common misconception that if you move overseas permanently you are no longer liable to UK inheritance tax. "Even when you are living in a foreign country, your family may be subject to British inheritance tax on your death. .......... The law says a child normally takes the domicile of his or her father. This is known as the domicile of origin, and it is hard to change. It is possible to acquire a new domicile of choice, but you need to convince the tax people that you no longer regard the UK as your home. ... "You would have to sell all UK property, close your banks accounts over here and even arrange to be buried overseas." Even then there is no guarantee the manoeuvre would work. The Revenue will not confirm or deny that your domicile has changed until a taxable event occurs --- in other words, until you die.' (emphasis added).

I am not trying to scare monger but some of you guys may benefit from a good long chat with your accountant or tax adviser.

immac

I think I remember that you also have to close all pension funds etc - anything that links you to UK taxation.

It makes you proud to be British that they are working so hard on your behalf.

Ian

aitchij

Your right Ian if they put as much effort into the NHS, education, employment and all other domestic issure maybe there wouldnt be as many people choosing to leave our green and pleasant land.

Gail

paul & emma

apparently you should buy the property in the name of whom ever will inherit it and save a fortune in tax.

JohnF

Not if you die before a certain qualifying period of time has elapsed... two years, five years? Can't remember exactly, but a fairly precarious way to do things, especially if you have a family fall out in the interim.

JF

juco

If we are talking inheritance tax then I wouldnt talk to an accountant or a solicitor regarding this as for a tax advisor it depends on their qualifications.
You need to get someone who specialises in `inheritance tax`

I could quote you examples of where accountants and solicitors have lost clients a lot of money due to unqualified advice.

Be careful!

Raysalaff

This was on the Property Overseas program, If that person who you have named happens to die before you and they have children, Your House would go to them and not to you, it's a bit of a mine field.

Ray

eastriding

If for example you have 2 or 3 kids, couldn't you put an overseas property in 4 or 5 names, you, your spouse and the children? On resale any CGT would be split between say 4 to use up 4 allowances and there would only be inheritance tax on half the value if both parents die so it could be under the threshold. Essential to write wills of course. As someone said, gift tax could also come into play if you are inconsiderate enough to die within so many years - a minefield.

juco

You are all beginning to play "what if " games with this. There is no straight answer as everyone has a different set of playing cards. What might be suitable for one could be the wrong advice (and costly) for another. There are too many variables that can compact on each other, there are ways to set it up to avoid or greatly reduce inheritance tax but that will depend on each individuals circumstances. You can read up on this for the next three months and you will still probably get it wrong, it is a very complex subject and depending on legislation can change each year. You have got to remember as each of us work out the best strategy to minimise the amount of inheritance tax that will be paid the government will change the perameters to claw that money back so you then change your strategy and then back to the goverment ...round and round we go!
Go to some one who specialises in `inheritance tax` and as mentioned before that is not normally a solicitor or an accountant!