Non-UK Situs Assets

[Kalzema10]

Dear All

I hope that everyone is well.

I have a query related to IHT and non-UK Situs assets. I was having a chat with somebody in respect of IHT and domicile. I believe I have an Indian domicile. My father was born there and I visit on regular occasions. I have some property over there and bank accounts. I also have lots of family still living there. I was told that I could potentially benefit from the Indian / UK Double Tax Treaty whereby any assets I hold outside of the UK could possibly fall outside my estate for UK IHT purposes.

I wanted to clarify the point on non-UK situs assets. I know people mention holding investments offshore and that they should also be non-UK situs assets in order to benefit from the double tax treaty. The question I have is are both the points important or just the non-UK situs elements? For example, I hold a number of investments across ETF and funds within a Hargreaves Lansdown account. All the investments I hold are from my understanding non-UK situs i.e. Irish and Luxembourg domiciled.

Have I done the right thing above or does the fact that I hold these investments in a Hargreaves Lansdown account and not an offshore account become an issue?

[AGoodman]

The location of the nominee custodian should be irrelevant. It should be only the location of the actual investment (i.e. Eire/Lux) that is relevant

[Kalzema10]

Thank you for the reply.

Therefore, the position I currently have would be OK? I was being told I would need to hold my investments offshore but I guess this is incorrect?

[maths]

The situs of the asset dictates whether IHT is chargeable or not assuming non domiciled status of the holder.

It would seem you hold shares/units in funds domiciled in Ireland/Luxembourg which are non-U.K. situs.

There is no need to hold the assets offshore. It is the situs of the asset itself which is important.

[AGoodman]

Belt and braces: it's confirmed by Article V(f) of the UK/India Treaty:

Shares, stock, debentures or debenture stock in a company (including any such property held by a nominee, whether the beneficial ownership is evidenced by scrip certificates or otherwise) shall be deemed to be situated at the place where the company was incorporated;

[Kalzema10]

Belt and braces: it's confirmed by Article V(f) of the UK/India Treaty:

Shares, stock, debentures or debenture stock in a company (including any such property held by a nominee, whether the beneficial ownership is evidenced by scrip certificates or otherwise) shall be deemed to be situated at the place where the company was incorporated;

Does that mean the nominee (i.e. Hargreaves) is irrelevant and it is the situs of the ETF i.e. Ireland or Luxembourg that matters?

[maths]

Yes, as confirmed in my post.

[maths]

India no longer levies an estate duty.

As a consequence the situs rules contained in Article V are not in point ie they have no relevance. This is because of Article IV(2).

Thus, situs of an asset for UK IHT is determined under UK domestic law.

[AGoodman]

Always learning...and i'm only 35 years out of date on this one.

[maths]

AG, you're far too modest (and honest) !

As one gets older one realises how much one doesn't know. When I was younger I thought I'd cracked, amongst other things, IHT. Still can't do double gross up.

The UK/India point is a bit abstruse to say the least.