Uk Inheritance Tax Question For Expat Living In Thailand

[PCA]

I would like to raise a question about UK Inheritance Tax and the best way to avoid or minimize it according to the current legal situation.

Assuming there is a Real Estate business running in the UK (owned houses split into flats that are rented out) and the owner has been living in Thailand for the past 6 years. He is UK citizen and would like to ask people with experience or in a similar situation to share their ideas and possible solutions.

Thank you for reading and welcome to any sort of suggestion.

Not sure if this question is placed right into this sub forum but if not then Moderators please move to the appropriate.

[PattayaPhom]

IHT is like a ball and chain, unless you have changed your UK Dom status then its 40% on anything over 325,000. Possibly 650,000 if married.

Edited March 12, 2013 by PattayaPhom

[BlackPuddingBertha]

As mentioned, if you arent resident then domicile dictates your exposure to IHT. It is possible to change your domicile (basically by severing all your family ties with the UK) but HMRC wont actually indicate whether they consider you have done so until you are dead, by which time it may be a bit late.

As a way around this a lot of non-resident people put their assets offshore as non-residents have no liability to UK IHT for their estate that is situated outside the UK.

Or just leave the part over 325K to charity. The people you were thinking of leaving it to probably dont deserve it and will probably spend it all on iPods anyway.

[wordchild]

If you and your wife are both UK dom then you can leave the lot to her free of IHT. Or, you can become a non dom (not easy) and ,at least,your non UK assets would then fall outside IHT. You could also consider gifting.

Are your potential beneficiaries UK non dom? If they are, consider selling in the UK and getting the assets out of the UK to somewhere more IHT friendly eg Singapore (no IHT) or even Thailand (also no IHT). Then, have your will drafted under Thai (or Singapore) law and make sure you have no UK will or assets (so no probate). On your death HMRC could still,in theory, come after your beneficiaries for IHT but highly unlikely and, as there are no UK assets, or no UK probate required, they would have no leverage. Kiss my Ass you could say, except ,sadly, by then, you wont be able to!

Edited March 12, 2013 by wordchild

[wordchild]

As mentioned, if you arent resident then domicile dictates your exposure to IHT. It is possible to change your domicile (basically by severing all your family ties with the UK) but HMRC wont actually indicate whether they consider you have done so until you are dead, by which time it may be a bit late.

As a way around this a lot of non-resident people put their assets offshore as non-residents have no liability to UK IHT for their estate that is situated outside the UK.

Or just leave the part over 325K to charity. The people you were thinking of leaving it to probably dont deserve it and will probably spend it all on iPods anyway.

For a Uk domiciled person (even if non resident at the time of death) IHT would still ,in theory, be due on the entire estate, incl any offshore assets , but there can be issues of practicality for HMRC in enforcing this.

Edited March 12, 2013 by wordchild

[HullyGully]

If you give assets away and live for 7 years after the asset has been gifted its free of IHT

Non Resident or Not Ord resident still get charged IHT

To me options are:-

NON DOM

GIFT ASSETS AND LIVE ANOTHER 7 YEARS

SET UP A TRUST

[PCA]

Thanks to all replies so far and please keep them coming. Now I have posted this on behalf of a friend of mine and I will have to forward your ideas for his consideration before contributing further.

Thanks again.

[rgs2001uk]

I am not being funny, but what the heck is your question?

Is person you refer to, the owner of these flats, or the person who will inherit?

Yes there are ways to avoid this obnoxious tax.

[beano2274]

This is what my mother will do, she will sign over the house to myself and my brother, if she lives more than the allocated 7 years no tax is paid, also if under a certain amount. Another thing she will do is at the end of each year transfer money to myself and my brother so as that is not added to the value of the house and then if she tragically went earlier would also be under the 325K

[BlackPuddingBertha]

For a Uk domiciled person (even if non resident at the time of death) IHT would still ,in theory, be due on the entire estate, incl any offshore assets , but there can be issues of practicality for HMRC in enforcing this.

I think you are wrong there (not the enforcement part).

Cant say I'm very bothered myself as I have left an amount under 325KGBP to my (fairly distant) family and all the rest to charity.

[rgs2001uk]

This is what my mother will do, she will sign over the house to myself and my brother, if she lives more than the allocated 7 years no tax is paid, also if under a certain amount. Another thing she will do is at the end of each year transfer money to myself and my brother so as that is not added to the value of the house and then if she tragically went earlier would also be under the 325K

None of my business, after your mother has signed the house over, make sure she has a rent book to pay you for the priveledge of living in her house.

Those facists at the DSS dont think the same as you and I, should your mother ever end up in care, they will want her to pay for what others get for free.

My parents own no property, its only out of the goodness of my heart my parents live in their (my) house, but when the time comes, they wont be paying for anyything.

My parents have no assests, its great the UK tax man pays me to stay here.

[wordchild]

For a Uk domiciled person (even if non resident at the time of death) IHT would still ,in theory, be due on the entire estate, incl any offshore assets , but there can be issues of practicality for HMRC in enforcing this.

I think you are wrong there (not the enforcement part).

Cant say I'm very bothered myself as I have left an amount under 325KGBP to my (fairly distant) family and all the rest to charity.

what i said was correct, a UK domiciled, non resident,s estate is subject to IHT on worldwide assets. Not relevent if one is not bothered, possibly, but that is the law.