What is IHT?
Inheritance Tax (IHT) is paid if a UK domiciled person’s estate (their property, money and possessions) is worth more than £325,000 when they die. This is called the ‘Inheritance Tax threshold’.
What is Domicile?
Domicile links an individual to a territory subject to a single system of law. It does so for purposes that affect various personal aspects of an individual’s life and legal relationship with the society of that territory. These purposes include the validity of marriages, rights of succession to property and, in some countries, taxation.
Why should you care?
Even if your estate contains no UK assets you may still face an IHT claim. Tax treaties and other international agreements contain clauses under which foreign governments are duty bound to help collect tax and may well mean that your death abroad gets reported back to the UK. You shouldn’t hope not to be noticed. You would be wise to plan.
What should you do?
First and foremost you should check your domicile to see whether you need to be concerned.Unhelpfully HMRC will not give rulings on domicile or give any indication of what they think about a person’s domicile. You need to consult an expert who will give you an opinion. Most of the time if you start early we can reduce your liability significantly if not completely.