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Inheritance
tax, death duties, estate tax call it what you want, but it
is the tax due on your assets in the event of your death.
The amount of money some governments collect through taxes
on death can be significant:
-
In
the UK inheritance tax is charged a rate of 40%
-
In
the US the Federal rate can be as high as 45%, plus
possibly state taxes
-
In
France death duties can be as high as 60%
Even if
you're living in a country which has no such tax, and there
aren't many that do not apply some form of death duties, do
not think that you will escape inheritance tax from your
country of origin.
e.g. If you
were originally from the UK and now live in another country,
you would still be liable for UK inheritance on any assets
you hold in the UK. You could also be liable for UK
inheritance tax on the assets you hold overseas too.
This is
because inheritance tax does not always follow the same
rules as income tax, because it is based on your "domicile"
or where you are "deemed domicile". If you are domiciled or
deemed domicile in the UK, you could be liable for UK
inheritance tax on all you assets worldwide in excess of
£300,000, at a rate of 40%.
It is
possible to change you domicile, but there are no hard and
fast rules as to what constitutes a change of domicile. But
doing some of the following would help to show you have
changed your domicile
-
Living in the another
country
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Effecting a local will
-
Working or starting a
business there
-
Making funeral arrangements
there
-
Having your family live with
you there
-
Sell all of your property in
the UK
-
Buying a house in another
country
However the
UK tax authorities will apply what is known as a "deemed
domicile", and treat your estate as UK domiciled if you were:
If you're not treated as UK
domiciled then only the assets in the UK are potentially
liable to inheritance tax.
As you can see from the above
example inheritance tax can not be avoided by simply moving
overseas. And it is not just UK citizens who have moved
overseas that face this problem. It applies to many
nationalities. But
inheritance tax can be avoided, and it can be avoided
perfectly legally by using some of the following methods:
-
Using specialist Trust
arrangements
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By investing in certain
assets
-
By carefully arranging your
Will
-
Gifting assets before your
death
It is important to act sooner
rather than later when it comes to inheritance tax - we all
know we're going to die at some point, and putting steps in
place to avoid long before your death can avoid inheritance
tax completely.
So if
you’re an expatriate, and want to know more about offshore
products or want to speak to an offshore
independent financial advisers,
then
contact us - free
and without obligation on +357 99 159 857 or
contact
us online.
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