New IHT rules affect expat UK BTL owners

by Property 118

11:47 AM, 16th March 2017
About 2 years ago

New IHT rules affect expat UK BTL owners

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New IHT rules affect expat UK BTL owners

From April 6th families of deceased UK expats will pay 40% inheritance tax on the total property estates assets.

The new rules will apply to expat investors purchasing UK property in an offshore company. Properties purchased in this way will no longer be exempt from IHT when the owner dies.

This makes the rules the same for expats as UK resident investors who are not allowed to use offshore companies to purchase UK property to avoid inheritance tax.

High price growth in London and other regions has seen an increasing number of expats using newly available expat Buy to Let products to invest in UK property hoping to avoid IHT issues for their families.

Many expat investors are unaware of the new rule changes and should now be considering ensuring liquidity on death with life insurance policies in trust, which will help dependents to cover the inheritance tax bill without being forced to sell properties held by the deceased.

 



Comments

Mark Alexander

12:12 PM, 16th March 2017
About 2 years ago

Duly noted
.

Sam Caine

9:54 AM, 17th March 2017
About 2 years ago

I find this an interesting comment.

How should the UK government know if a non UK resident dies outside of the UK? Also, how should the UK government link know when a non UK resident dies if the property is held by a non UK company? The non UK resident does not necessarily have to have shares in the non UK company, for example.

Sam

Mark Alexander

10:41 AM, 17th March 2017
About 2 years ago

Reply to the comment left by "Sam Caine" at "17/03/2017 - 09:54":

Exactly my thoughts Sam.
.

Jo Roebuck

9:46 AM, 18th March 2017
About 2 years ago

Reply to the comment left by "Sam Caine" at "17/03/2017 - 09:54":

The UK will know if the non uk resident dies if he stops paying uk tax on the property if it is not in a company. Is that right?

Jo Roebuck

9:48 AM, 18th March 2017
About 2 years ago

My father and I are both expats. My father has a property in the UK which is tenanted. When my father dies and I inherit the property what is the position regarding IHT?

Yvette Newbury

10:32 AM, 18th March 2017
About 2 years ago

In response to Sam Caine - this rule affects UK expats. Therefore when they pass away their assets will go through probate and that is how HMRC would know. If held in a non-UK company the death of a party to that company (in whatever shape or form) may cause a change within the company that could alert the UK Govt/HMRC that the ultimate owner of that asset is from the UK even if they do not hold shares within it. This assumes that the UK expat has not changed their domicile which would therefore remain the UK.

In response to Jo Roebuck - is your father a UK expat and if so, is he still UK domiciled? Are you UK domiciled? Your father would be liable for CGT on the property if sold prior to his death. With regards to IHT, your executor would assess your father's assets for probate within the UK and have to fill out the probate form listing those UK asset to assess for IHT
.

Jo Roebuck

18:03 PM, 18th March 2017
About 2 years ago

Y L Newbury
My father is an expat and lives in the IOM as do I. He and I are no longer UK domiciled

Fred Bloggs

2:57 AM, 20th March 2017
About 2 years ago

So before i pop my clogs, i would be wise to sell my portfolio, pay 28% CGT on gains made since April 2015 and transfer the money to my foreign wife's account abroad ?


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