Inheritance Tax

Unlike many countries in Asia, the UK has an advanced system of Inheritance Tax. Inheritance Tax is a tax that is paid when you pass away. As far as UK residential property is concerned for investors who do not count the UK as their permanent home, Inheritance Tax is due at a flat rate of 40% on the market value of the property after deducting certain borrowings, costs, and Inheritance Tax also applies over most other UK situated assets you might own, whether real estate or not.

Inheritance Tax does not normally apply where properties pass between spouses and civil partners (a UK term which means registered same sex and opposite sex relationships). However, it always applies when assets pass to children and other people. There are Inheritance Tax consequences to think about when you give an interest in UK property to another person.

We normally recommend that you have a UK will, and the decisions you make about how you own property can have Inheritance Tax implications. Most people will normally sell their properties at some point and move the money they receive outside of the UK. This is normally sufficient to remove any charge to Inheritance Tax for those who are not domiciled in the UK and for many this is the best and more natural solution. However, things are sometimes not as simple as that, and planning can be required.

We can outline some of the solutions and to help you understand the circumstances in which you need to think about Inheritance Tax. Finally, from 6th April 2017 there is no longer Inheritance Tax protection by holding your property within a non-UK company.