UK Inheritance Tax

[MartynE]

I was having a chat with a fellow owner the other day and was astonished to hear her say that she assumed her Turkish property was outside the net for inheritance Tax in the UK, just because she was now resident in Turkey.

Wrong!!! For a UK domicile, the tax is assessed on all worldwide assets regardless of where it is or where you live. Don't confuse residency with domicile, or you might be leaving a lot less to your kids (and a lot more to George Osbourne) than you realise!

Just saying...

Linkback: https://www.enjoykalkan.com/forum/index.php?topic=10978.0

[jezhuggins]

Thank you for this,something that I did not know...

[MartynE]

Well, forewarned is forearmed, as they say! It's known as the voluntary tax because it's easy for most people to avoid with a few simple measures - but if you don't know about it you can't do anything about it! 

[Painter Man]

Hi Martyn,

Yes, UK Inheritance Tax is based on world wide assets and is currently payable on the value of all assets above £325K unless left to a surviving spouse. The allowance if not used, can as I understand, it be transferred to the spouse and added to the spouses allowance on death of the spouse.
You say it is a voluntary tax and easily avoided but it is not quite as simple as you imply, yes there are trust structures that can be used but there are disadvantages to these, insurance policies can also be used but these are not cheap. The assets can all be given away and provided the donor lives seven years the gift will be exempt any tax due but this also has disadvantages. The major asset most people have is their home and if this is given away the donor can not live in it, there are suggestions that the donor can pay a market rent for living in the property but the Inland Revenue do not like this and there is no guarantee that this solution will be accepted.
If you can suggest some easy ways of avoiding the "Dreaded Tax" legally I would like to hear about them. I am aware of certain illegal options but these are dependent on the revenue not finding out.

[MartynE]

Hi Painter Man

Ok, I agree it's not necessarily "easy" to avoid Inheritance Tax but there are certainly tried, tested and perfectly legal methods of mitigating it. Of course, there are costs involved in re-drafting wills, setting up trusts and planning a gifting strategy but once you know those costs it's a simple decision... am I prepared to pay some modest costs now, in order to save my estate (ie my children) thousands in tax when I die? That's what I mean by "voluntary tax"

To be fair, a lot of people take the view that their kids are going to be well off enough when they die anyway, so why pay hard earned money now just to get rid of a tax bill that, by definition, they will never see? 

[Painter Man]

Hi Martin,

You are right, there are going to be a lot of children who are going to get a bit of a shock when they see how much tax is going be paid out of their parents estates, especially if the parents lived in the greater London area.
I wanted to send you a private e-mail but I do not seem able to find out how. Perhaps you, or some one else can as I have some questions you may be able to answer but it really is not something for general publication.
Thanks

[MartynE]

My email address is martyn.ellis@sjpp.co.uk