A Leading Insurance Companya��s recent research shows 74% of UK expats who consider themselves no longer UK domiciled still hold assets in the UK, and 81% have not ruled out returning to the UK in the future. This means HMRC is likely to still consider them to be deemed UK domiciled.
This is because British expats are likely to have a UK domicile of origin, acquired at birth. They can try to acquire a new domicile (a domicile of choice) by settling in a new country with the intention of living there permanently. However, it is very difficult for someone to lose their UK domiciled status and acquire a new one.
There are no fixed rules as to what is required to do this and the burden falls on the individual to prove they have acquired a new domicile, and often this isna��t finally decided by HMRC until someone passes away. The problem is, after paying lots of money to a�?fancya�? lawyers (perhaps) to try to change your domicile, the only time it can be tested is AFTER your death a�� too late to do anything, leaving your beneficiaries to try to sue the lawyers a�� and good luck with that!
Living in another country for a long time, although an important factor, does not prove a new domicile has been acquired. Among the many conditions that HMRC list, it states that all links with the UK must be severed and they must have no intention of returning to the UK. AA�staggering 82% of UK expats do not realise that both their UK and world-wide assets could be subject to UK Inheritance Tax (IHT)!
As most British expats will still be deemed UK domiciled on death, it is important that they understand that this means their worldwide assets will become subject to UK IHT. A common misconception is that just UK assets are caught. This lack of knowledge could have a profound impact on beneficiaries.A�Before probate can be granted, the probate fee and any IHT due on an estate must be paid.
With UK IHT currently set at 40%, there could be a significant bill for beneficiaries to pay before they can access their inheritance. The ONLY sure way to avoid a hefty bill is by setting up a Life Insurance policy written in trust for your beneficiaries, so as to have access to cash to pay the required fees. By placing the policy in trust, this will enable funds to be paid out instantly without the need for probate.
Research shows 11% of UK expats with UK property did not know that UK income tax may need to be paid if their property is rented out, and 27% were unaware that Capital Gains Tax may need to be paid if the property is sold. All income and gains generated from UK assets or property continue to be subject to UK taxes. Some expats seem to think that just because they no longer live in the UK they dona��t need to declare their income or capital gains from savings and investments or property held in the UK. By not declaring the correct taxes people can find they end up being investigated by HMRC, and the sanctions for non-disclosure are getting tougher.
Want to avoid VOLUNTARY taxes? Contact me nowa��a��..!