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Soaring UK house prices creating tax problems for domiciled expats
| Published: | 9 May at 6 PM |
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Tagged: Property Abroad, UK, Canada, Citizenship, Working Abroad, Pension Transfer, England, Living Abroad
Expats living abroad but maintaining their homes in the UK may be happy about soaring property prices, but the resulting inheritance tax implications are an unlooked-for liability.
Several decades ago, only the mega-rich needed to be concerned about protecting their families from the 40 per cent inheritance tax due on their death.Since the massive hike in UK real estate values, especially in London and the Home Counties, many average homeowners will have been unwittingly drawn into the net.
For expats keeping up their connections with the UK through their family property or previously purchased buy-to-let investments, it’s a serious worry. The revenue office considers those with property in the UK as domiciled and liable to taxation including inheritance tax.
A recent survey indicated that 48 per cent of expats living and working overseas have made no provision for retirement, nor any attempt at inheritance tax planning. However, awareness is growing and leading to a rush to reduce inheritance duty as the number one priority.
It seems that financial literacy is on the increase as the UK government finds yet more ingenious ways to part its citizens and their families from their hard-earned cash. Retired expats are bearing the brunt of measures such as the cancellation of the winter fuel allowance, the threat of the removal of the individual tax allowance and the likelihood that the frozen pension scandal will never be resolved in retirees’ favour.
At present, inheritance tax kicks in at 40 per cent on assets totalling more than £325,000 for a single person and £650,000 for married couples. The average price of a basic London home is due to hit this figure in 2014, with annual price rises now in double figures and those affected advised to look at trusts, gifting and other such options before it’s too late.
Several decades ago, only the mega-rich needed to be concerned about protecting their families from the 40 per cent inheritance tax due on their death.Since the massive hike in UK real estate values, especially in London and the Home Counties, many average homeowners will have been unwittingly drawn into the net.
For expats keeping up their connections with the UK through their family property or previously purchased buy-to-let investments, it’s a serious worry. The revenue office considers those with property in the UK as domiciled and liable to taxation including inheritance tax.
A recent survey indicated that 48 per cent of expats living and working overseas have made no provision for retirement, nor any attempt at inheritance tax planning. However, awareness is growing and leading to a rush to reduce inheritance duty as the number one priority.
It seems that financial literacy is on the increase as the UK government finds yet more ingenious ways to part its citizens and their families from their hard-earned cash. Retired expats are bearing the brunt of measures such as the cancellation of the winter fuel allowance, the threat of the removal of the individual tax allowance and the likelihood that the frozen pension scandal will never be resolved in retirees’ favour.
At present, inheritance tax kicks in at 40 per cent on assets totalling more than £325,000 for a single person and £650,000 for married couples. The average price of a basic London home is due to hit this figure in 2014, with annual price rises now in double figures and those affected advised to look at trusts, gifting and other such options before it’s too late.
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