Published On: Wed, Aug 21st, 2019

Inheritance Tax rules: When tax must be paid if you don’t live in the UK | Personal Finance | Finance


Whether it’s for the culture, the weather, or the chance to spend time with relatives, there is no shortage of reasons why a person may move overseas. However, some people may wonder whether they’re still required to pay Inheritance Tax to HMRC – even if they live elsewhere. Gov.uk offers guidance on the matter, explaining that if one’s permanent home is abroad, Inheritance Tax is only paid on UK assets. This can include property or bank accounts they have in the UK.

For a deceased person living outside of the UK, Inheritance Tax is not paid on “excluded assets”.

Gov.uk explains that this covers things such as foreign currency accounts with a bank or the Post Office, overseas pensions, and holdings in authorised unit trusts and open-ended investment companies.

That said, the government website highlights that the rules may differ if one has assets in a trust or government gilts, or they are a member of visiting armed forces.

There are particular circumstances in which a person may not count as living abroad.

HM Revenue and Customs (HMRC) treats a person as being domiciled in the UK if they have lived I the UK for 15 of the last 20 years.

Alternatively, one will not count as living overseas if they have had their permanent home in the UK at any time in the last three years of their life.

Should Inheritance Tax be charged on the same assets by the UK and the country where one lived, the executor might be able to reclaim tax through a double-taxation treaty.

The standard Inheritance Tax rate is 40 per cent.

However, this is only charged on the value of the estate above a threshold – which, at the moment, stands at £325,000.

Should a person leave everything above the threshold to their spouse, civil partner, a charity, or a community amateur sports club, then Inheritance Tax is not normally payable.

READ MORE: Inheritance Tax: Who can inherit a private pension and will tax need to be paid?



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