The long arm of the tax man can still grab some of your money even if you live or retire abroad as an expat.
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Some people must still pay inheritance tax in the UK even if they live thousands of miles away on the other side of the world.
Tax rules in the UK say expats must pay the tax on cash, property or other assets remaining in Britain if they die overseas.
Some assets are excluded from IHT.
- These include foreign currency accounts at a bank or the Post Office
- Overseas pensions, such as QROPS
- Investments in unit trusts
But different rules may apply if your assets are tied up in a trust or government gilts (bonds).
When an expat is UK tax resident
You can talk to the HM Revenue & Customs Inheritance Tax and probate helpline to check if someone’s UK assets are excluded from tax.
Another point to watch is you will be treated as a UK tax resident for inheritance tax if you have lived in Britain for 15 out of the past 20 years or you had your main home in the country at any time in the last three years of your life.
Many expats also worry about double taxation between the UK and a foreign country, but a raft of agreements between Britain and other nations should mean your estate only pays tax once on the same asset.
Inheritance rules are also different in other countries – including popular expat destinations such as France, Spain, Dubai and the USA.
How much is IHT?
Professional advisers are likely to insist you make a will in each country where you have significant cash and other property or possessions.
Dubai has recently opened a repository for expats opting for their estate to be tax treated under British law.
You will pay inheritance tax in the UK if your estate is worth £325,000 or more, although couples can double up on unused allowances.
Anything left to a spouse or civil partner is tax-exempt, while special rules also allow passing your home to close relatives.
The estate above the inheritance tax nil-rate band is charged at a flat rate of 40% in the UK.
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