All about UK Inheritance Tax

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Inheritance tax (which is normally payable only by individuals) combines some of the features of a gift tax, death duty and wealth tax.

Commercial property held through an offshore company is not liable to UK inheritance tax.

For most non-UK resident individual property investors, who have had no prior connection with the UK, only assets within the UK will be within its scope. Although, with a 40% rate on death and a 20% rate on lifetime transfers, inheritance tax is at first sight a significant impost.

There are many reliefs and exemptions which, properly used, can greatly reduce its impact. In particular:-

  • the first £325,000 of transfers (on a seven-year rolling basis) are free of tax
  • many transfers are “potentially exempt ” and create a charge to tax only if death follows within seven years of the date of the transfer
  • the use of trusts may often effect substantial savings

Commercial property held through an offshore company is not liable to UK inheritance tax.

However from 6 April 2017 UK residential property will be liable to UK inheritance tax irrespective of how it is held.