UK British Expats Hong Kong

Inheritance Tax IHT Guide

Please email using our contact form for our full UK British Expats Hong Kong Guide to UK Inheritance Tax.


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

In the mean time below is a summary of how a UK Expat is viewed by Her Majesties Revenue and Customs (HMRC).

In the UK, a person can be one or both of the following regarding UK taxation.

  1. An “Ordinary Resident” – this is regarding “Income and Capital Gains Tax”
  2. A “UK Domiciled” person – this is regarding “UK Inheritance Tax” (death duties)

On Moving To Hong Kong

Income and Capital Gains Tax

Normally would pay Hong Kong Income Tax

Still liable for UK Capital Gains Tax on dispersals within the first 5 full tax years where the person remains a non-ordinary resident for UK Tax purposes i.e. remains in Hong Kong.

UK Inheritance Tax

This is the main issue. A persons estate is always liable for UK Inheritance Tax on their death (no matter how long they have been residing outside of the UK; or what their friends say in a pub) provided they are UK Domiciled.

Clearly this will apply to most UK people; the test is usually were their “Father” was born.

So if a person’s Father was born in the UK that persons estate will on their death be liable for UK Inheritance Tax.

Also note that a person cannot change their domicile and their “Domicile” will be “Tested” on their death

The Tax rate is 40% above what is known as the “Nil Rate Band”  currently (2011) as follows.

325,000 GBP if single

650,000 GBP if married to a UK domiciled person (payable on the second death)

380,000 GBP if married to a non UK domiciled person (payable on the UK domiciled person’s death) – this can have terrible consequences for people married to say Hong Kong girls as the persons assets are seized by HMRC and the tax has to be paid prior to the assets being released.

Example:  A UK Domiciled person married to a local Hong Kong girl dies with net assets of 1m GBP.  IHT due 1,000,000 – 380,000 x 40% = 248,000 GBP in cash

Now UK IHT is a voluntary tax because if you plan correctly you will not pay it.

How Can UK Expats Legally Avoid UK IHT

  1. Gifts and PETs (7 years rule applies) but you lose control of the asset
  2. Life Insurance – Pays the IHT payment at a discounted rate
  3. QNUPS – Immediately transfers money (Cash) outside of your estate
  4. QROPS – Immediately transfers UK (Pension) money outside of your estate

UK British Expats Hong Kong Inheritance Tax IHT Guide

Want to know more

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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