In the first of a series of articles for the Telegraph Weekly World Edition, David Franks, CEO of Blevins Franks, outlines 10 ways expats can avoid paying
1) Change your domicile
Unlike any other tax, UK Inheritance Tax (IHT) follows you around the world, regardless of where you may reside. That’s because it is based on your domicile, not residence. So you need to change your domicile in order to shrug off IHT.
If you really have made a permanent move to a new country, and intend to stay there for the foreseeable future without ever intending to return to live in the
Whilst it can be difficult, it is certainly not impossible. We use a Domicile Determination Questionnaire which we have developed over the years to document all of the relevant facts about one’s domicile. From that we develop a thorough affidavit documenting the intentions, facts, reasoning and so on to support the new domicile of choice claim. This document arms your heirs with important evidence to resist any IHT claims. Your estate will remain liable to IHT on
2) Business property relief
If you own shares for more than two years in a trading company or group which has not accumulated excess cash or investments, then the value is 100 per cent exempt from UK IHT. A similar exemption exists for agricultural property (called Agriculture Property Relief). The detailed conditions which apply to BPR and APR need to be explored to ensure that the investment qualifies.
Leave your assets to charity: no UK IHT. Note that all EU registered charities can qualify ( it used to be limited to
4) Marry your partner
Get married – as long as your spouse is a
Gift an asset to your children or grandchildren; as long as you survive seven years, there is no UK IHT. If your spouse is much younger than you, arrange for her/him to make the gift (but watch out that this is not caught in some form of contractual arrangement). You can also make gifts which restrict access to the funds (without using a Trust) so that the beneficiary cannot overspend.
6) Disabled children
Transfers into a trust for disabled children are free from UK IHT. The disability must meet certain conditions. You can be the Trustee so that you are in control of the funds with provisions to appoint others following your death.
Transfers into a Qualifying Non-UK Pension Scheme is exempt from UK IHT, and the fund can pass IHT free on your death. Take careful advice on how to set this up. The QNUPS can give the settler an income – no need to be an excluded beneficiary. So you can have access to the funds, yet it is outside of your estate for UK IHT. There is no seven year wait period either. However, there is some anti-avoidance legislation which needs to be reviewed to ensure that you don’t fall foul.
8) Move to
9) Move your
A qualifying recognised overseas pension scheme is exempt from UK IHT (subject to certain anti-avoidance laws).
10) Give away your annual income to charity
David Franks is the founder and CEO of Blevins Franks, a tax and wealth management provider for expats all over the world. He regularly advises individuals looking to live overseas on financial and tax matters. Blevins Franks provide the Telegraph’s Expatriate Wealth Service; for all enquiries please call 0800 027 7756, email email@example.com or visit telegraph.co.uk/expatwealth.
This is the first in a series of four articles that David will be writing for the Telegraph. If you have an offshore finance-related question, why not post it on our online discussion forum for David or another member of the Blevins Franks team to answer?