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newjez

Inheritance tax

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As an Australian living in the UK, inheritance tax is on my mind. I'm assuming my kids will get hit by it when I go, as even an average house goes over the limit.

As an Australian, is there an easy way to structure your affairs to a avoid it? Would I need to become resident in Australia again? Would I be able to still hold UK assets?

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1 hour ago, newjez said:

As an Australian living in the UK, inheritance tax is on my mind. I'm assuming my kids will get hit by it when I go, as even an average house goes over the limit.

As an Australian, is there an easy way to structure your affairs to a avoid it? Would I need to become resident in Australia again? Would I be able to still hold UK assets?

We are interested in this as well.

Are you a British citizen as well?  Don’t know if that makes a difference.I think the taxable threshold is  raising to 1 million pds for a couple in April before paying the exorbitant inheritance tax? So I think you will only be taxed over that amount. Hope so.

I don’t have any answers, similar dilemma different scenario, British living in Australia with UK assets, no Australian income.

If we finally become Australian citizens next year, will that help, also if we then have no assets in UK only UK pensions, if we still have assets over a million pds but in Australia will we still be eligible to be charged.

I think residency and habitual residence, or domicile, not sure if those are the right terms? are relevant..

Hope someone who knows the answers replies.

 

Edited by ramot

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6 hours ago, newjez said:

As an Australian living in the UK, inheritance tax is on my mind. I'm assuming my kids will get hit by it when I go, as even an average house goes over the limit.

As an Australian, is there an easy way to structure your affairs to a avoid it? Would I need to become resident in Australia again? Would I be able to still hold UK assets?

I think you should arrange a meeting with a financial advisor. Inheritance tax can often be avoided with the correct plans in place. At very least, you’ll be able to make the best plans to keep any tax to a minimum. Not everything is included when adding up worth when you die. For example, I have a very good death in service benefit with my employer should I die whilst still employed and that does not form part of my estate. Many people think that sort of thing is part of your wealth but it isn’t, not everything is. Depending on what sort of bank account you have, you may be able to get advice from a financial advisor with them. If not, it’s easy to find one. It may cost you a few hundred pounds but the benefit of such an appointment will often save a great amount of unnecessary inheritance tax being paid out. 

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This is generally a tax advice issue first.

Financial planning and arranging suitable cover to mitigate an estate's IHT burden generally flows afterwards once you have an understanding of your IHT exposure.

Am happy to have an initial freebie chat with anyone concerned about IHT.

Remember that your liability to UK IHT is a function of domicile, not residency.

*    UK domiciled = worldwide estate subject to IHT

*   Non UK domiciled = UK estate only subject to IHT

=>  Your domicile status is key to the scope of your estate's liability to UK IHT.

Best regards.

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Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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On 19/01/2020 at 03:34, newjez said:

As an Australian living in the UK, inheritance tax is on my mind. I'm assuming my kids will get hit by it when I go, as even an average house goes over the limit.

The UK IHT limit is £325,000 and it's double that for a couple (i.e. your partner can pass there assets to you with no charge and assuming they don't disperse anything to others when you die you get to use their allowance as well - so £650K)

The average house in the UK is £233K - so still plenty of room in even a single person's IHT allowance (unless you didn't mean average house at all)

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1 hour ago, Ausvisitor said:

The UK IHT limit is £325,000 and it's double that for a couple (i.e. your partner can pass there assets to you with no charge and assuming they don't disperse anything to others when you die you get to use their allowance as well - so £650K)

The average house in the UK is £233K - so still plenty of room in even a single person's IHT allowance (unless you didn't mean average house at all)

Think it changes to 500 pds single person 1 million pds for a couple April 2020. That’s how I read it. 

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7 minutes ago, ramot said:

Think it changes to 500 pds single person 1 million pds for a couple April 2020. That’s how I read it. 

That's true when it includes your main residence and your main residence is over £175K (£350K for couples) 

Basically anyone can leave £325K free of tax. Where your estate includes a main residence the first £175K of that will be IHT exempt. assuming the rest of the house value fits into the £325K main IHT allowance (along with any cash other assets) then its all IHT free.

Its a bit conveluted - essentially a politcial fudge so they aren't seen to be raising the main IHT allowance but also seen to be being fair to the South East where properties are hugely expensive

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7 hours ago, Ausvisitor said:

That's true when it includes your main residence and your main residence is over £175K (£350K for couples) 

Basically anyone can leave £325K free of tax. Where your estate includes a main residence the first £175K of that will be IHT exempt. assuming the rest of the house value fits into the £325K main IHT allowance (along with any cash other assets) then its all IHT free.

Its a bit conveluted - essentially a politcial fudge so they aren't seen to be raising the main IHT allowance but also seen to be being fair to the South East where properties are hugely expensive

I think it's different if you're non-resident as well?


Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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1 hour ago, Marisawright said:

I think it's different if you're non-resident as well?

It probably is (it usually is) but there isn't as much written about that

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2 hours ago, Marisawright said:

I think it's different if you're non-resident as well?

Hope not, where did you read that?

might need to buy a bigger mattress!!!!

Edited by ramot

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2 hours ago, Marisawright said:

I think it's different if you're non-resident as well?

The scope of the charge to IHT is a function of your UK domicile. not residency.

Best regards. 

  • Thanks 1

Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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1 hour ago, Alan Collett said:

The scope of the charge to IHT is a function of your UK domicile. not residency.

Best regards. 

 

1 hour ago, Alan Collett said:

The scope of the charge to IHT is a function of your UK domicile. not residency.

Best regards. 

Thank you Alan for confirming that, that’s what we had understood.. It’s not easy to understand the difference to residency, ordinarily resident and domicile. Best to have it confirmed by an expert.

Edited by ramot
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5 minutes ago, ramot said:

 

Thank you Alan for confirming that, that’s what we had understood.. It’s not easy to understand the difference to residency, ordinarily resident and domicile. Best to have it confirmed by an expert.

That's what tax accountants are here for!  😀

Best regards.

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Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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