The Government will shortly be introducing changes to the rules
on Inheritance Tax on any UK residential property held by those
domiciled outside the UK (commonly referred to as
"non-doms"), where such assets are held through a non-UK
The current situation is that property owned by way of non-UK
company is excluded from liability for Inheritance Tax; however,
from the 6 April 2017, property will no longer be
'excluded' from this liability. This development means that
Inheritance Tax will now be charged on the value of a UK
residential property which is owned in an offshore corporate
structure upon the death of an individual shareholder.
Likewise, the new rules will apply where an offshore company is
wholly owned by an offshore trust. The result being that trustees
will have to pay Inheritance Tax on the value of the property at
ten year anniversaries and quite possibly, will have to pay an
Inheritance Tax exit charge if the property is removed from the
trust. Moreover, the changes will affect those non-doms who intend
to make a lifetime gift of shares in an offshore company owning UK
residential property or alter their offshore structure of such a
Such changes are far-reaching in that they will apply without
regard to the length of time that the company has owned the
property or whether the individual is resident in the UK or
It has now become clear that the Government will not be
incorporating any transitional provisions for existing structures
and there will not be any forms of relief available for companies
that are planning to unwind or 'de-envelope' their existing
In order to enforce these new rules, an Inheritance Tax return
will have to be submitted whenever such a charge arises or where
there is a reporting obligation.
It is worth noting that there will also be changes to the rules
on Capital Gains Tax and Income Tax for non-doms from the same date
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The personal representatives, who are responsible for administering the estate of someone who has died, generally require a Grant of Representation to allow them to collect in, sell and distribute the deceased's assets.
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