As a non-resident in the UK, it’s important to understand the inheritance tax implications of your assets, as this will have an impact on the tax that you pay on your inheritance. Inheritance tax is levied on the value of your estate after it has been passed to your beneficiaries and is applicable for both UK and non-UK residents.
As a non-resident in the UK, it can be difficult to navigate the complicated rules surrounding inheritance tax, and this guide will help you understand the basic principles of inheritance tax for UK non-residents. Read on!
What is Inheritance Tax?
An inheritance tax is a tax levied by the UK government on the value of an estate when it is passed on to a beneficiary. The tax is paid by the person who passes the estate on. The value of the estate is only calculated if it’s above a certain threshold. The current threshold is set at £325,000, but if the amount is more than this, an inheritance tax of 40% will be calculated.
Who is Liable to Pay Inheritance Tax?
If you have assets such as properties or other investments in the UK, you are liable to pay inheritance tax on the value of these assets when they are passed on to your beneficiaries. After this, the taxes will be passed on to your beneficiaries.
Inheritance Tax and Non-Domiciled Individuals
A non-domiciled individual is someone who was born outside of the UK and also has a permanent home outside of the UK. Such individuals may be able to reduce their inheritance tax liability by claiming certain reliefs on a remittance basis. This means you only have to pay taxes remitted to the UK on your behalf.
Exemptions and Reliefs
There are several reliefs and exemptions available to help you minimise your inheritance tax liability. These include:
- If the estate is worth less than £325,000, there is no inheritance tax to pay
- Assets left to a spouse are not subject to inheritance tax
- Assets left to charity are exempt from inheritance tax
- In certain cases, business relief can be claimed for up to 80% of your assets
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