Expats should actively try to reduce inheritance tax
British expats should “actively pursue legal ways to mitigate their inheritance tax (IHT) liabilities” because the UK strips its citizens of the right to vote in UK general elections after 15 years of living overseas, yet still subjects them to UK IHT!!!
It’s an outrage that the UK deems it acceptable to disenfranchise millions of British citizens who choose to live abroad for more than 15 years, meaning that they have no vote, but that it still imposes UK inheritance tax on them.
Even after 15 years of residence overseas, the vast majority of expats remain ‘domiciled’ in the UK and, as such, they are subject to IHT – which is a staggering 40 per cent of their worldwide assets if the value of those assets exceeds £325,000 for an individual and £650,000 for a married couple.
The government really does want it both ways on this issue. Surely if, as the government argues, expats are ‘out of touch’ with the UK after a decade and a half, so their voting rights should be withdrawn, then their assets should be out of reach from the UK tax authorities after the same period too?
It seems unlikely that any political party will reverse this discrimination, especially as fears about the UK economy continue to grow, British expats should actively pursue legal ways to mitigate their inheritance tax liabilities. Fortunately, there are several ways expats can do this.
I would urge expats to speak to their financial adviser on how they can legally make the most of their legacy for their loved ones – if their votes aren’t good enough for the government, then neither should their money be when they die.
It is important they make a robust plan to ensure as much of their estate as possible goes to their heirs – especially because even expats who live overseas for many, many years and who no longer have assets in the UK may still be liable for UK IHT.
Nigel Green deVere Group
Blog written 27th February