12.07.2016 Residential Property and Inheritance Tax changes in the UK

12.07.2016 Residential Property and Inheritance Tax changes in the UK

In April 2017 UK residential property owned directly or indirectly (via an offshore structure) will become liable to Inheritance Tax (IHT). Inheritance Tax is a tax paid on the estate (property, money, and possessions) of a person who’s passed away. The current rate is 40% on any value above the £325,000 threshold. IHT is only charged on the UK property directly held by non-domiciled – it has been relatively simple for wealthy non-domiciles to own the UK property through an offshore structure, which as well provided privacy. This is referred to as ‘enveloping’ the property: the individual possesses the shares of the company that owns the property. Many have taken steps to ‘de envelope’ the property and own it directly in their own name. Whilst this will save the Annual Tax on Enveloped Dwellings (ATED), it will still leave the value subject to IHT. The most straightforward solution many have used was funding for the IHT liability with a life insurance policy. This provides immediate liquidity that may not normally be available until the affairs of the estate have been finalised. If you are interested in creating an insurance policy to deal with inheritance tax risks, we would be delighted to assist you. Please contact Tatiana Svetlova on tsvetlova@svetlovallp.com

admin
dzimen1103@gmail.com