Do You Have to Pay Inheritance Tax if You Live Abroad?

If you’re a UK expatriate or you’re thinking of moving to another country you’ll definitely want to read this week’s blog post. Prestige Tax and Trust Services asks; do you have to pay inheritance tax if you live abroad?

An introduction to inheritance tax

Inheritance tax is a levy that the government charges on your estate once you’ve passed away. However your estate only has to pay inheritance tax if it’s worth more than £325,000 at the point of your death. If your estate does eclipse this sum it will have to pay 40% tax on anything above the threshold.

It’s the job of the executor of your will or the administrator of your estate to work out inheritance tax. If you want to avoid placing this considerable burden on their shoulders, we advise that you calculate inheritance tax on your estate before you die. This will allow you to make a will that accurately reflects how much your loved ones are set to receive once you’ve passed away.

UK residence and inheritance tax

Working out inheritance tax can be a complicated task. It can be even more complicated if you live abroad, as there are some cases where UK tax laws don’t apply to you if you reside permanently in another country. Is this the case with inheritance tax? HM Revenue and Customs (HMRC) will take inheritance tax from all of the assets that comprise your estate if:

  • You had a permanent home (“domicile”) in the UK at any time during the last three years before your death.
  • You were a resident of the UK for 17 of the last 20 income tax years before your death.

Asset location and inheritance tax

If you don’t fulfil these requirements then your estate won’t have to pay inheritance tax on any assets located outside of the UK after you’ve died. However it will have to pay tax on any assets located inside the UK. There are a few exceptions where your estate won’t have to pay inheritance tax even if the asset in question is in the UK. Click here to see a full list of UK assets that are excluded from inheritance tax.

Prestige Tax and Trust Services

It’s difficult to work out inheritance tax, especially if you live abroad. If you want to make sure your estate pays the right amount of inheritance tax after you’ve passed away come to Prestige Tax and Trust Services. Our team have the expertise and legal knowledge you need to ensure that your estate complies with inheritance tax law after you’ve died.

 

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