Inheritance Tax

[Galel001]

May I please have some advise.

I am domiciled and resident in Malta. I have a daughter also domiciled in Malta but resident in the Uk.

I own properties beside my residence in Malta which I would like to donate to my daughter and set up an usufruct so I can enjoy the rent etc before she gets married.

my question is the following.

Since I am Maltese and living in Malta would my daughter still be liable to UK IHT on the value of the property and usufruct upon my death since my assets are located in Malta, or would the Maltese Law apply in such scenario.

She is the only beneficary.

Also, if I donate the properties prior to the marriage (British future husband) would he be entitled to the donated properties (as per above) should they divorce please.

Thanks

[AGoodman]

No, your daughter would not be liable to IHT on your death as (a) you are not Long-term resident in the UK (this replaces domicile) and (b) the assets are not in the UK.

IHT is charged on the estate rather than the beneficiary and will not be chargeable if neither of the two factors above apply.

One minor (and sadly complicated) factor to bear in mind if your daughter does not yet own her own home: If an individual buys a property when they already own another property, they must pay a much higher rate of stamp duty (SDLT).

This does not apply if they are also selling a home, but could be an issue if they are buying their first home.

The problem is that the law is unclear whether a bare owner under a usufruct should be treated as "owning" that property. I think probably not, but, as I say, there is some uncertainty.