business & tax

Borrow Money On Assets Overseas

Inheritance Tax is charged on the worldwide assets of individuals that are domiciled in the United Kingdom, wherever they are resident.

Individuals domiciled outside the United Kingdom are subject to Inheritance Tax in respect of assets situated in the United Kingdom such as a house, whether resident in the United Kingdom or not.

UK Resident and Domiciled UK:

UK Property:  Visit the UK Property Section

Overseas Property: If you are domiciled in the United Kingdom, the value of your holiday home would be included in the calculation for Inheritance Tax in the UK less any taxes due where the property is situated. 

You need to investigate the tax rates and liabilities in the country where the property is based.  If the tax rates are higher than the UK or the rules on using trusts are not available, you may consider raising a loan or mortgage secured against the property for the greatest amount possible.  This would have the effect of reducing the value of assets in that country and therefore the Inheritance tax liability.  You may wish to consider information offered in the International Channels.

UK Resident for Non Domiciled UK:

UK Property:  Consider raising a loan or mortgage secured in the UK against the property in the UK, for any value in excess of the nil rate tax allowance.  This has an immediate effect of reducing your tax liability in the UK.  Consider also changing ownership of property to tenants in common.

Overseas Property:  Will be taxed where the property is based and/or where you are domiciled.

This will not necessarily mean that you are not taxed in other countries where you may be deemed domicile. 

Request expert inheritance tax advice today or buy your own tax planning pack in the Money Shop.