A Guide To INHERITANCE TAX - St James's Place

By living abroad for a few years, you may have become ‘nonresident’
but the UK tax authorities may still regard you as a
‘UK-domicile’. Although you can take steps to demonstrate
you have changed your ‘domicile’, HMRC is unlikely to
confi rm that this has been achieved until you have died, so
careful contingency planning is always advisable.
Your domicile is typically influenced by the domicile
of your parents but also your place of birth and where
you have been brought up. You can change domicile by
moving permanently abroad, but to achieve this you would
effectively need to sever all ties with the UK, such as
ceasing to own a UK property or belonging to a UK club.
So how do you determine your IHT exposure?
The calculation is often, although not always, simple.
Broadly, you count up the value of all the assets remaining
on death, subtract the Nil Rate Band and what is left is
taxed at 40%. If your spouse dies before you without fully
using their Nil Rate Band the proportion of the unused
amount can be carried forward to use on your death.
However it is still legally possible to ensure that as much
of your estate as possible stays out of HMRC’s grasp –
and that can be done by seeking specialist, professional
advice. Careful IHT planning is all about passing as
much of the proceeds of an estate as possible to chosen
beneficiaries rather than to HMRC. It is also about
maintaining flexibility and control over any arrangements
that are made.
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PARTNERS IN MANAGING YOUR WEALTH