Foreign Assets of a deceased husband

[sabaamin]

My husband left £176k in a foreign bank account when he died. On his death the account was ransfered to my account. Funds abroad accumulated interest and dividends for 15 years and now amounted to £376k.
last month I transfered the money to UK and have distributed £100k to each of our three children as per their share of inheratance.I have retained £76k.
My husband did not leave a will though I know that he would have liked me to distribute his wealth in the way I have done.
Am I liable to pay tax on £200k or on interest element of my £76K. I have a foreign Domicile.Please help.

[Lee Young]

If you are UK domiciled or deemed domiciled you will be taxed on your worldwide estate and all gifts made within 7 years.

If you are not domiciled in any part of the UK then only your UK based assets, and gifts within 7 years out of UK based assets are liable to inheritance tax on your death.

You mention you have a foreign domicile - notwithstanding you may be deemed domiciled in the UK if you have been resident here for income tax purposes for 17 out of the last 20 tax years.

How long have you lived in the UK?

If you are not yet deemed domiciled in the UK if you die within 7 years of the gifts made to your children then there will be inheritance tax to pay on them as well as all your other UK based assets.

Depending on the extent of your other UK assets you may wish to consider moving the cash offshore again, assuming wherre you move it to does not have higher inheritance tax rates.

However this is a specialist area and you should really do nothing until you have taken specialist tax advice.

lxy@m-b.co.uk

[King_Maker]

Domicile could be crucial here.

What was your husband's Domicile?

Did he have any UK situated assets (bank accounts, shares, houses etc) when he died?

As he left no Will, you need to be careful that you are not distributing his Estate in an unlawful manner - both UK and abroad.

[Taxbar]

The first issue of UK IHT is probably not relevant.

If your were both UK non-Domiciled or deemed UK Domiciled or UK Domiciled the Spouse exemption applies on the first transfer. Only if your Husband was Non-Dom and you were UK Domiciled or Deemed Domiciled will the Spouse exemption be limited.

The interest element for the last 15 years is another question.

If you are non-Dom, then unless interest and capital were separated you will be laible for tax @ the point of remittance.

You need to contact an adviser expert in this field to sort this out before problems accrue. The retention may not be enough and you should inform your children of this fact ASAP.

Daniel Feingold
STP
info@stratax.co.uk

[King_Maker]

Daniel,

"The first issue of UK IHT is probably not relevant."

The father died Intestate, so there is no Inter spouse exemption for the children, if he were UK domiciled. So UK IHT does seem relevant to me.

[Taxbar]

Possibly??

We are going into the realms of speculation and demonstrating why specific detailed professional advice is required.

The querist says she obtained a transfer of an offshore account into her name and presumably this was on some legal basis.

If they were only Deemed Domiciled in the UK. UK IHT rules would apply, but the estate would be dealt with under the intestacy rules of the Country of Domicile.

Daniel Feingold
STP
info@stratax.co.uk

[sabaamin]

Thanks a lot to Lee Young, king_Maker and Taxbar for your input.
I am not much concerned at the IHT issue. My main concern is Income Tax.
I alongwith my husband came to UK in 1972, and after 4 years my husband was posted overseas where we lived till 1992.My husband was non UK domiciled.We did however have had bank accounts and a property in UK since 1972.I had no income prior to 1992 as I was not working.All his saving were from salary earned from his jobs overseas.
Thanks once again for your help.