Inheritance Tax Question.
Discussion
Some help please guys with the maze that is UK Inheritance Tax.
Scenario is a married couple with three properties (one in UK, one in South Africa and one in Luxembourg)
The couple are a UK national and a SA National.
He was born and grew up in SA but never worked there.
She was born and grew up in UK, started working life in UK.
The have two children both UK nationals but with dual status with SA.
They have lived out of the UK within the EEA for 10 years plus.
She is trying to become UK Non-domiciled, I think she has no chance as she has a permanent tie to the UK with the UK house (solely in her name) and still hold UK bank accounts. To my mind this would be enough to be read as an intent to return.
My question relates to Inheritance Tax allowances.
They are a married couple, they have both lived and worked in the UK in the past. If they both die do they have the double allowance or would the revenue accept only her allowance? (Make sense?)
If she dies first would her estate be liable to pay IHT when passed to him? Normally there would not be a problem here and no tax in the case of passing to a spouse but I have a suspicion that this could not be the case here.
Lastly, anyone know anything about South African IHT?
Ta
Scenario is a married couple with three properties (one in UK, one in South Africa and one in Luxembourg)
The couple are a UK national and a SA National.
He was born and grew up in SA but never worked there.
She was born and grew up in UK, started working life in UK.
The have two children both UK nationals but with dual status with SA.
They have lived out of the UK within the EEA for 10 years plus.
She is trying to become UK Non-domiciled, I think she has no chance as she has a permanent tie to the UK with the UK house (solely in her name) and still hold UK bank accounts. To my mind this would be enough to be read as an intent to return.
My question relates to Inheritance Tax allowances.
They are a married couple, they have both lived and worked in the UK in the past. If they both die do they have the double allowance or would the revenue accept only her allowance? (Make sense?)
If she dies first would her estate be liable to pay IHT when passed to him? Normally there would not be a problem here and no tax in the case of passing to a spouse but I have a suspicion that this could not be the case here.
Lastly, anyone know anything about South African IHT?
Ta
Essentially it depends on whether her other half is deemed UK domicile or not. Judging by the length of time they have spent outside the UK I would say not (as you correctly suggest, she will still be UK domiciled in the eyes of HMRC).
In the case of a UK domiciled individual with a non-domiciled spouse, the usual spouse's exemption does not apply. In this case, the exemption is limited to £55,000 in addition to the current nil-rate band applicable at the time. If she was to die first, IHT would be payable on assets left to her spouse in excess of the £55,000 and the NRB combined. She will pay tax on her worldwide assets. As it stands, her spouse would pay no UK IHT.
In the case of a UK domiciled individual with a non-domiciled spouse, the usual spouse's exemption does not apply. In this case, the exemption is limited to £55,000 in addition to the current nil-rate band applicable at the time. If she was to die first, IHT would be payable on assets left to her spouse in excess of the £55,000 and the NRB combined. She will pay tax on her worldwide assets. As it stands, her spouse would pay no UK IHT.
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