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Re UK Inheritance tax If an Indian, living in usa for

Customer Question

Re: UK Inheritance...

Re: UK Inheritance tax

If an Indian, living in usa for 10 years, and who has neer visited UK, becomes sole proprietor of uk registered private house,
of which value likely to exceed present limit of £325k, is he liable to this tax and if so to what extent?

Submitted: 10 years ago.Category: UK Tax

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11/30/2010

UK Tax Professional: Tony Tax, Tax Consultant replied 10 years ago

Tony Tax, Tax Consultant

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A UK based property owned by a non domiciled individual will be subject to Inheritance Tax in the UK regardless of the fact that the individual has never visited the UK. The first £325,000 of the UK based estate is exempt and the balance is taxed at 40%.

Customer reply replied 10 years ago

could u pl inform me the basis on which your opinion rests--the relevant section/s and /or decided cases

Incidentally, if the non resident has been a joint tenant with more than one joint tenant

can he/she claim the commencement of the 7 years period from the date his/her name was FIRST included as a joint tenant

thanks and regards

UK Tax Professional: Tony Tax, Tax Consultant replied 10 years ago

See the section "Which Assets are Taxable in the UK?" here. This is taken from the HM Revenue & Customs website.

What are you getting at when you refer to the seven year period?

Customer reply replied 10 years ago

1. the property is NOT permanent home of he NR. Hence domicile or deemed to to be

how applicable

2 a b and c, repeat c, the NR, are jt tenants.

a dies,afer some time b dies hence c becomes the sole propriertor.the 7 year period refers to the death of a. a had changed the jt tenants before the time a,b and c became jt tenants--ie d was the jt tenant but since deleted --4 became 3. the question 7 year period starts from the date c's name was FIRST included as the jt tenant??

trust this is clear now

UK Tax Professional: Tony Tax, Tax Consultant replied 10 years ago

The Indian national has never been to the UK so, assuming their father wasn't domiciled in the UK, they cannot be domiciled in the UK.

If the Indian national was domiciled in the UK or was deemed to be domiciled in the UK having spent 17 of the previous 20 years as a resident of the UK then all their assets whether they were situated in the UK or not would be subject to UK Inheritance Tax. As they are not UK domiciled only the UK property will be subject to UK IHT if it is worth more than the exemption when they die.

The seven year period only applies to gifts within seven years of the death of the donor. C only became a part owner when their name was added to the property deeds. I see you have posted a similar question elsewhere so I'll let another expert answer it as I really don't see what you are getting at I'm afraid.

Customer reply replied 10 years ago

I have already stated earlier that my interpretation is thart uk property must be permanent home if iht is to apply. am i incorrect. secondly adding the name of the NR in ttle deeds,does it not imply a gift? he is not dependant on me , he is major and I have no legal obligation to support him.Hence the question of 7 years after death pl

thanks

UK Tax Professional: Tony Tax, Tax Consultant replied 10 years ago

The UK property does not have to be the permanent home for IHT to apply. If you can point me to what you read that lead you to your conclusion I'll happily take a look at it. The advantage of retaining a foreign domicile as opposed to a UK one is that non-UK property escapes UK IHT.

When the NR was added to the title deeds that is a gift and the seven year period starts at that time for the donor.

Customer reply replied 10 years ago

as requested i quote from hmrc's website under " "

Tell me about domicile

Liability to UK inheritance tax depends on your domicile at the time you make the transfer.

Domicile is a legal concept. It is not possible to list all the factors that affect your domicile, but we explain some of the main points in this section.

"You are domiciled in the country where you have your permanent home." Domicile is different from nationality or residence.

You can only have one domicile at any given time.

Hence pl reconsider

I m happy u now agree with me about 7 years concept regardign the NR. I take it that u agree that the period starts from the date NR was FIRST included, which I requested

initially.

I wonder who gained much from our exchange okpl

UK Tax Professional: Tony Tax, Tax Consultant replied 10 years ago

The non-resident Indian is not domiciled in the UK but their UK property will be subject to UK Inheritance Tax if it is worth more than the exemption when they die regardless of it not being their permanent home. The house is in the UK so it is caught by UK IHT. The owner does not have to be domiciled in the UK to be liable to UK IHT.

Please click here and scroll down to the heading "Which Assets are Taxable in the UK?" where it states "If you are domiciled abroad, inheritance tax applies only to your UK assets."

As I said in my previous post, the seven year period starts from the date of the gift, the gift being a joint tenancy in the property.

Customer reply replied 10 years ago

sorry but u have not answered my specific query.

NR was first made jt tenant in 2004. after that in 2007, although he continues to be jt tenant, the other jt tenants are not the same. does this make a difference? in other words, for the NR, 7 year period starts from 2004. pl confirm

UK Tax Professional: Tony Tax, Tax Consultant replied 10 years ago

I have answered it.

The non resident became a joint tenant in 2004. The seven year period for the person who gave the NR a joint tenancy begins in 2004. The addition of different joint tenants makes no difference.

Edited by Tony on 12/2/2010 at 3:56 PM EST

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