Inheritance on tax on non-UK resident's stocks?

[Tony_K]

My mother died in March. She moved to Ireland and was a resident of Ireland for the last 45+ years. Her estate includes shares in a variety of British companies that were valued at ~₤280,000 at the time of death (worth more now.) My sister (who also lives in Ireland) and I (living in the U.S.) will inherit these. My question is whether we will have to pay UK inheritance tax on these shares? Second, if we sell them, what is the basis for determining capital gains: the original purchase price of the shares or the value at the time of our mother's death?

Thanks for any advice.

[Taxbar]

Dear Tony K,

This is an age old problem.

UK Inheritance Tax is payable on assets situated here even if the person is not resident or domiciled here.

Your mother's estate will be entitled to the nil band exemption of £250,000.

So UK tax will only be levied on the excess. about 30,000 at 40% or 12,000.

The shares will then be subject to Irish Inheritance Tax as part of her estate. Full credit will be given for ay UK tax paid.

For Capital Gains tax purposes it is the relevant law in Ireland and US that count. I would assume they take the date of death value as the base cost for Capital Gains.

Daniel Feingold
Strategic Tax Planning
e-mail sedrate@easynet.co.uk
Tel: 0161 720 7244

[Ian McTernan CTA]

There is a Double Taxation Agreement with Ireland which may apply to exempt the UK shares from UK IHT. You should contact the Inland Revenue on 0845-3020900 (0044-115 974 2424 from outside UK) Capital Taxes Office, and ask if the DTA can be applied here. Otherwise shares are taxed where registered, ie. UK regsitered company shares are taxed for IHT in the UK. Please note there are different rules for Government stocks.

Ian McTernan CTA
McTernan Associates Ltd
Chartered Tax Advisers
ian@imcternan.com