Inheritance Tax IHT Planning

UK British Expats Hong Kong

Introduction To Inheritance Tax Planning

Planning ahead for when you die allows you to set out clearly who should get what from your estate. Also, you can maximise Inheritance Tax reliefs and exemptions if your estate might be worth more than the Inheritance Tax threshold. The threshold is £325,000 and will remain so until 2014-15.

The Importance Of Making A Will

Making a will and being sure people know where to find it is the first step to making sure that your estate is shared out exactly as you want it to be when you die.

If you don’t leave a will, your estate will be shared out among your next of kin according to a strict order of priority called the ‘rules of intestacy’. This means that people you want to benefit from your estate – such as a partner you’re not married to or in a registered civil partnership with – might get nothing. The rules are different in Scotland.

You can write your will yourself or buy a pre-printed form from many stationers or newsagents. It’s very important to sign your will and get the signature witnessed or it won’t be valid.

If you have more complex financial affairs, you may need legal and financial advice.

Note: It is advisable to make a will in every jurisdiction were you:

  1. Are Domiciled
  2. You hold assets of any kind.

This may mean that you have several wills for example a person is UK domiciled and has properties in France and Hong Kong. This person should make three wills for the jurisdictions of the UK, France and Hong Kong.

Inheritance Tax Exemptions – what you can give away

Gifts are treated in a number of ways for Inheritance Tax purposes. However, you only need to worry about making gifts if you think your estate – including the value of any gifts you make – might exceed the Inheritance Tax threshold when you die. If your estate is over the threshold, any gifts you make more than seven years before you die will be exempt from Inheritance Tax.

Giving Your Home Away

There can be tax implications if you give your home away to your children or someone else – especially while you’re still alive.

If you give your home away and continue to live in it, your estate or the person you gave your home to might still have to pay:

  • Inheritance Tax on the property when you die
  • Other taxes such as Income Tax

Inheritance Tax relief For Businesses and Farms

Certain types of property can be passed on free from Inheritance Tax – or at a discounted value for Inheritance Tax purposes. This can be done while you’re still alive or through your will.

You may be able to claim special relief for the following assets:

  • Business assets – such as shares in a business partnership, family company shares, land, buildings and machinery.
  • Agricultural property – such as land, working farmhouses, farm workers’ cottages and barns.
  • Woodland timber.
  • National Heritage property – or famous and important works of art (but only in very rare cases).

The problems of giving away assets (cash, investments, property, etc) during your lifetime are clear. “You lose control of those assets”. We have all heard of people who gave their assets away; only to be abandoned in their time of need.

In any event as discussed above “Gifting is not a particularly efficient way of avoiding IHT”.

Trusts and Inheritance Tax – (Excluding QROPS and QNUPS)









You can use a trust to pass assets on to others, for example to those who aren’t immediately able to look after their own affairs, such as your children.

Gifts into a trust may still be subject to Inheritance Tax if your estate, including the amount being transferred, is over the Inheritance Tax threshold (£325,000 in 2010-11).

Trusts can be complicated – always seek professional advice.

The problem with “Trusts” is that you cannot benefit from them, you lose control of the assets contained in the trust which can only be used to benefit a third party for example you children on your premature death.

The exception are QNUPS (page 39 and Appendix C) and QROPS  (page 45 and Appendix B); which are very special “Trusts” which can be set up for UK Expats and will remove any deposited monies immediately from your estate (and therefore from any liability to UK IHT); while still allowing you to benefit from the monies / investment.

Importantly QROPS and QNUPS are fully approved by HMRC

UK Inheritance Tax (IHT) Planning For UK British Expats Hong Kong

UK Inheritance Tax (IHT) Planning For UK British Expats Hong Kong

Inheritance Tax IHT Planning

UK British Expats Hong Kong

Would you like to ask us a question or receive further information. Then please email us on our contact form, we will be pleased to answer any questions you may have.

This web page was written in 2015. For the latest information please download the latest FREE Expat British UK Pension Transfers QROPS GUIDE; QROPS information explained.

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