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Where Taxpayers and Advisers Meet

Inheritance Tax - Domicile of heir/deceased/estate domicisle

Michael886
Posts: 11
Joined: Mon Apr 24, 2017 4:05 pm

Inheritance Tax - Domicile of heir/deceased/estate domicisle

Postby Michael886 » Wed Jan 01, 2020 9:54 pm

I am an EU citizen (with recently acquired British citizenship) residing in the UK. I am not yet domiciled in the UK, and will not be for another 14-19 years. I own real estate and have the majority of my savings/assets in my European country of origin, where all my family members are domiciled (and their estates).

In the event of a family member passing (from whom I am entitled to inheritance), I have the following questions:
1. Assuming I am domiciled in the UK at the time, is it the tax rules of the country in which the heir is domiciled, or the tax rules of the country in which the deceased is domiciled, that apply (ie. which country claim the inheritance tax)?
2. Does the UK have any claim to inheritance tax from non-domiciled residents?

Thanks.

AGoodman
Posts: 1043
Joined: Fri May 16, 2014 3:47 pm

Re: Inheritance Tax - Domicile of heir/deceased/estate domicisle

Postby AGoodman » Thu Jan 02, 2020 12:40 pm

The UK taxes estates so the domicile of the deceased is the important factor. The domicile of the heir is generally irrelevant except for spousal relief.

Non--doms are only subject to UK IHT to the extent the assets are within the UK at the relevant time (i.e. time of death or earlier gift).

Michael886
Posts: 11
Joined: Mon Apr 24, 2017 4:05 pm

Re: Inheritance Tax - Domicile of heir/deceased/estate domicisle

Postby Michael886 » Thu Jan 02, 2020 3:47 pm

Many thanks, Agoodman.

Just to clarify, so with the deceased and the estate (all assets) being domiciled in eg. Finland, none of the inheritance would be subject to UK tax?

AGoodman
Posts: 1043
Joined: Fri May 16, 2014 3:47 pm

Re: Inheritance Tax - Domicile of heir/deceased/estate domicisle

Postby AGoodman » Fri Jan 03, 2020 12:02 pm

Correct

Michael886
Posts: 11
Joined: Mon Apr 24, 2017 4:05 pm

Re: Inheritance Tax - Domicile of heir/deceased/estate domicisle

Postby Michael886 » Mon Jan 06, 2020 1:21 pm

Thanks, Agoodman.

Final question. Does this apply if the country in which the deceased was domiciled has no inheritance tax (Eg. Sweden)?

https://www.gov.uk/guidance/inheritance-tax-double-taxation-relief

"If the country where the person was living charges Inheritance Tax on the same property or gift the UK is taxing, you might be able to avoid or reclaim the tax through a double taxation convention."

"..If you have paid tax in an overseas country and the relief is due, they will give you a credit for the tax paid overseas against the Inheritance Tax due in the UK on the same assets on which the overseas tax was paid. The relief will be limited to the actual amount of overseas tax paid on those assets."

AGoodman
Posts: 1043
Joined: Fri May 16, 2014 3:47 pm

Re: Inheritance Tax - Domicile of heir/deceased/estate domicisle

Postby AGoodman » Tue Jan 07, 2020 10:32 am

It's just outside the IHT charge.

You don't have to consider treaty relief.


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