Equity Magazine November 2017

WEALTH MANAGEMENT
UK IHT receipts increased from £2.3bn in
2009/2010 to a staggering £4.8bn in
2016/2017. This is expected to increase to
£5.8bn around 2018/2019
There are few taxes in life that are optional and
inheritance tax is one of them. IHT can cost
your family and loved ones a considerable sum
of money in the event of your death. However,
with a little forward planning, it is possible to legitimately
avoid this tax. Therefore, it is a necessity to understand the
basics and create a strategic plan. Here’s a brief look at
IHT in the UK and some ways it can be minimised.
IHT is a tax payable by a British domiciled individual on
worldwide assets, in the event of their death. It is
chargeable at a rate of 40 per cent on all assets, over the
current Nil Rate Band (NRB) which is £325,000
(Dhs1,574,677). Married couples or those in a civil
partnership, each receive the NRB, thus increasing the
threshold to £650,000. The NRB has not changed since
2009 and is fixed at £325,000 until 2021.
In the past, IHT was largely aimed at high net worth
individuals, however more UK citizens are now paying
significant IHT. Indeed, UK IHT receipts increased from
£2.3bn in 2009/2010 to a staggering £4.8bn in 2016/2017,
according to figures from Statista. This is expected to
increase to £5.8bn around 2018/2019. London and the
South-East account for a high proportion of IHT receipts,
according to The Telegraph, which is not surprising, given
that much of the UK’s property and business wealth is
concentrated in these areas.
Whether or not you can change your domicile to avoid
the tax, is a complex area and often one that is
misunderstood. Whilst many people who have lived
abroad and have been non-residents for many years
consider themselves no longer UK domiciled, the reality is
very different. Being non-resident certainly does not imply
non-domicile, and it is your address that determines where
you pay IHT and not your residency. At birth, you receive
your domicile of origin from your father (or mother if
your parents were not married at the time). This will
remain unless your parents lived abroad and changed their
own domicile by choice before you were aged 16 – then
you would also change to the domicile of dependency.
After age 16, your domicile depends on your own
circumstances. British expats may live abroad for many
years without losing their UK domicile if they have not
taken sufficient steps to break their ties with the UK.
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EQUITY