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Where Taxpayers and Advisers Meet

PET status of overseas gifts given before becoming UK resident

HarryHowls
Posts:13
Joined:Wed Jul 30, 2014 1:48 pm
PET status of overseas gifts given before becoming UK resident

Postby HarryHowls » Sat Jan 14, 2017 12:07 am

Hello all,

Over the last three financial years I have given my son over 250,000 pounds total (lucky him). I am currently non-resident & non-domicile.

Anyway, i am thinking of moving back to the UK next year (2018-2019 FY) to be closer to my grandchildren in my old age. HMRC say that I would be considered UK domicile if I live in the UK at any point in the 3 years before my death. So if I were here when i died, would the £250,000 gift (that I gave to my son when i was non-dom) now come under PET rather than be excluded?

So basally, does final resident/domicile status matter only for PET or is it only those years in which you were UK resident/domicile that count under PET?

Thabnk you

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: PET status of overseas gifts given before becoming UK resident

Postby maths » Sat Jan 14, 2017 3:04 pm

A lifetime gift of a foreign situs (ie non-UK) asset by an individual who is not UK domiciled at that time (or is not deemed UK domiciled) to another individual qualifies as excluded property and hence outside any charge to IHT. Should the donor subsequently (and within the 7 year period) acquire a UK domicile (or deemed UK domicile) and die within that period the property still remains excluded and no IHT charge arises.

The following statement is incorrect:
HMRC say that I would be considered UK domicile if I live in the UK at any point in the 3 years before my death

HarryHowls
Posts:13
Joined:Wed Jul 30, 2014 1:48 pm

Re: PET status of overseas gifts given before becoming UK resident

Postby HarryHowls » Thu Jan 26, 2017 10:48 am

Thanks maths,

But the bit you said was incorrect - can i draw your attention t the HMRC website:

https://www.gov.uk/inheritance-tax/when ... he-uk-dies

Have they just simplified it?

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: PET status of overseas gifts given before becoming UK resident

Postby AGoodman » Thu Jan 26, 2017 3:32 pm

HMRC have overstated it.

They say "...had your permanent home in the UK at any time in the last 3 years of your life"

but they mean were domiciled in the UK at any time in the last 3 years of your of your life (which is what the legislation says).

They are using "permanent home" to mean lived in the UK with the intention to remain permanently.

Andrew Goodman

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: PET status of overseas gifts given before becoming UK resident

Postby maths » Thu Jan 26, 2017 5:42 pm

Somewhat inevitably, the attempts by HMRC to provide guidance with respect to legislation to help taxpayers can unfortunately often result in misunderstanding and ambiguities.

The legislation (which is of course what is important) provides that, at death for example, if an individual dies not domiciled in the UK he/she will still be treated as UK domiciled if within 3 years preceding the date of death he/she was (under common law) UK domiciled.

The concept here is that for an individual who is UK domiciled under common law who then leaves the UK subsequently acquiring a non-UK domicile of choice, then for IHT purposes such individual is treated for IHT as remaining UK domiciled for a further 3 years.


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