Finance Bill 2017 brings foreign owners into IHT net

The provisions of the Finance Bill 2017 seem to mean non-UK domiciled people and companies are brought into the IHT net to the extent that they own UK residential property (directly or through a trust structure).

So the estate of a French or Chinese investor would suffer 40% IHT on death (with no reduction for the double taxation treaty relief for the duties payable by his or her estate at death in another country).

Further, any non-UK person, company or trust which provides a personal guarantee for a bank loan (or a third part loan) and/or provides collateral for the loan will be caught also, in so far as the ‘value’ of the personal guarantee itself is now deemed to be a UK status asset, resulting in 40% exposure for individuals (or trusts, where the settlor is still alive and is a beneficiary).

Further, in the case of a trust owning the residential property (directly or indirectly), there is up to 6% IHT charged every ten years on the residential property element of the trust net assets.

It is inconceivable to think that all non-UK property investors are aware of the new rules which come in on 6th April 2017.

Grazzer