UK Property Ownership – Tax Implications

From 6th April 2017 the UK Inheritance Tax (IHT) law changed so that the use of offshore companies to own UK residential property can no longer provide a shelter for Inheritance Tax. For deaths on or after 6th April 2017 all non-UK domiciled persons will now be liable to pay Inheritance Tax at the rate of 40% on all assets in the UK (including real estate) if they are worth more than £325,000 at the time of death.

Inheritance Tax

Inheritance Tax is now chargeable on all UK residential property, regardless of ownership structure. These new Inheritance Tax rules affect all non-UK domiciled individuals (non-doms) whether they are resident in the UK or not. Anyone who currently owns UK residential property through a company incorporated outside the UK or other opaque vehicle will be liable to Inheritance Tax on the value of such UK property in the same way as UK domiciled individuals. The measure will apply to all UK residential property whether it is occupied or let and of whatever value. In the past, UK property held in a company incorporated outside the UK (possibly held in a non-UK resident trust) was not a UK asset for Inheritance Tax purposes and therefore, for non-doms, not subject to Inheritance Tax.

In the light of these changes, it is now more important than ever for anyone with UK assets including residential property to put in place a valid UK Will.

Different countries have different rules around inheritance, succession, property and tax. You need a Will that protects your assets as much as possible and ensures that your wishes are carried out in regard to your estate. It is vitally important therefore that any Will meets the requirements in the country in which you have assets and is legally valid.

A properly drawn up Will should include the appointment of Executors who are responsible for administering an estate after death, set out who is to inherit the estate (beneficiaries) and make provision if one or more of the beneficiaries have died before the Testator.

If a valid Will is not in place then the UK Intestacy laws will determine how the UK assets are distributed which could mean that unintended beneficiaries could inherit and the distribution of the estate under the intestacy laws may not be the most tax efficient.

For anyone with UK assets requiring a Will to deal with those assets should seek professional advice to ensure that it deals with the assets in accordance with UK law and works alongside any other Wills where there are assets in other countries or legal jurisdictions.

If you would like to discuss Inheritance Tax concerns or your options in more detail our team of experienced wills and probate lawyers would be delighted to hear from you.

About The Author

Mandy Potter is a full member of The Society of Trust and Estate Practitioners (STEP).

Mandy specialises in all aspects of private client work in particular preparation of Wills, tax planning, probate and estate administration. In addition she also advises clients on the preparation of general and lasting powers of attorney, the registration of enduring powers of attorney, deputyship applications and advising generally on Court of Protection matters

Mandy can be contacted on