All those deemed to be \u2018British-domiciled\u2019 are potentially liable to IHT, so how do you know if that\u2019s you if you\u2019ve been an expat for a lengthy period of time?\u00a0 Rather frustratingly, it\u2019s very difficult to ascertain whether or not you\u2019ve lost your domicile, and a multitude of factors are taken into consideration by HMRC, with the goal posts seemingly ever moving.\u00a0 You might think that you\u2019ve been out of the UK for so long that you\u2019ve lost your UK domicile status, but Richard Burton also thought the same having spent the last 26 years of his life in Switzerland.\u00a0 He requested to be buried with a copy of Dylan Thomas\u2019 poems as well as having the Welsh flag laid over his coffin and as such, was considered to have \u2018emotional ties\u2019 to Wales and hence therefore UK domiciled.\u00a0 His estate was subsequently issued an IHT bill of \u00a32.4 million.<\/p>\n
There are tests one can do to determine their domicile status with a legal specialist, but I always feel it\u2019s best to err on the side of caution and assume that Brits, certainly those whose father was born in the UK, are UK domicile.<\/p>\n
We each have a nil rate band (NRB) of \u00a3325,000 which is the amount you can leave your beneficiaries before IHT of 40% is applied to the remaining balance.\u00a0 We also have a residential nil rate band (RNRB) of \u00a3150,000 (increasing to \u00a3175,000 on April 6th <\/sup>this year) which means that if your primary residence is worth over this sum, you can leave \u00a3475,000 before any IHT is due.\u00a0 Those with a UK-domicile spouse or civil partner are able to transfer their entire estate to them, with IHT only due on the second demise.\u00a0 This means that, assuming the primary residence is worth \u00a3300,000 or over, that IHT is only due on estates worth over \u00a3950,000.\u00a0 Obviously, this increases to \u00a31 million for married couples with homes over \u00a3350,000 from April this year.<\/p>\n If your estate far exceeds this sum, then there are a number of options available to help mitigate your overall IHT liability.\u00a0 One such solution is a \u2018Discounted Gift Trust\u2019.<\/p>\n A Discounted Gift Trust allows a UK domiciled person to \u2018gift\u2019 a plan into trust, receive an income for life or until funds have been exhausted from this gift, and, assuming they\u2019ve been successfully medically underwritten, an immediate reduction in their IHT liability.\u00a0 A further reduction of the Discounted Value applies after 7 years survival from the point the gift was made.\u00a0 Growth within the trust is also immediately outside of ones estate for IHT purposes.<\/p>\n Depending on the structure of the trust will determine whether this is classed as a Chargeable Lifetime Transfer (CLT), or a Potentially Exempt Transfer (PET), [Rather a lot of acronyms in this industry!], which means that a lifetime inheritance charge may be applied if it\u2019s the former.\u00a0 Clearly, this is a very complex subject, and one that needs to be discussed in depth with a qualified professional before setting anything up.<\/p>\n It may be the case that simply gifting assets, or using a different trust is best suited to you, and should always be based on your individual position and requirements.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" All those deemed to be \u2018British-domiciled\u2019 are potentially liable to IHT, so how do you know if that\u2019s you if you\u2019ve been an expat for a lengthy period of time?\u00a0 Rather frustratingly, it\u2019s very difficult to ascertain whether or not you\u2019ve lost your domicile, and a multitude of factors are taken into consideration by HMRC,…<\/p>\n","protected":false},"author":2,"featured_media":5241,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false},"categories":[153,67],"tags":[],"class_list":["post-5202","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-inheritance-tax","category-153","category-67","description-off"],"acf":[],"yoast_head":"\n