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IHT and foreign property

Source: HM Revenue & Customs | | 04/06/2019

If a permanent home (domicile) is in the UK then any foreign situated property owned at date of death will be chargeable to Inheritance Tax. The site of an asset is usually the place where the asset in question is considered to be located for legal purposes. The site of immovable property is the place or country where the property is situated.

Certain assets are excluded from the charge to Inheritance Tax if the taxpayer was not domiciled in the UK at the date of the transfer, regardless of where the assets are. Any claim to Inheritance Tax can be affected by the way assets outside the UK devolve, even when the taxpayer is domiciled in the UK. For example, the foreign country may have different legal rules for property held jointly or on trust.

Although domicile can change, there is generally a presumption in favour of the continuation of an existing domicile. To change a domicile, many factors are taken into account, for example, the location family, property and business interests. There is also the UK concept  of deemed domicile, whereby under new rules introduced from 6 April 2017, any person who has been resident in the UK for more than 15 of the previous 20 years will be deemed to be domiciled in the UK for tax purposes.

 

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McAllisters is a partnership trading from Paxton House, 11 Woodside Crescent, Glasgow providing accountancy and tax services and general business advice and is a member of ICAS (Registration No 0342) and an FCA exempt professional firm (No 301235). Its VAT number is 261 3019 94

McAllisters (Scotland) Ltd is a related business providing tax and business advisory services to McAllisters and its clients. McAllisters (Scotland) Ltd is registered in Scotland (Registration number SC146856). Its VAT number is 624 0564 62.

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