PoppetUK

If you had around £500k would your family be better off with regards to Inheritance Tax if you stayed in the UK or moved to Australia.

Thanks in advance.

Wendy&Mike

AFAIAA, if you move to Australia any capital gain will be forgotten. You get a one time chance to import everything you own with no tax implications. If you leave a house in the UK and sell it later, you will pay capital gains on the difference from when you emigrated and when you sell. If you die the (AFAIAA) tax is the capital gains you would have paid if you turned everything you owned into cash. Your house is exempt. The rest goes to your kids/spouse/dogs home etc. There is no inheritance tax in Australia.

As for U.K. inheritance tax, I believe it can take up to 18 years before you are completely free from any U.K.I.T. liability. I'm not sure how they would ever collect it though.

I believe you are better off in Australia tax wise but, I am definitely no expert.

Mike.

comet555

I'd get in touch with Alan Colett. I think he could probably answer your question, or know someone who does.

http://www.gomatilda.com/contact.cfm#ourpeople

Swerv-o

Can you clarify who will be moving? By family, do you mean moving your family (as the inheritors) to Australia and leaving your older family (the people doing the dying and leaving the inheritance) in the UK?

Or do you mean when you die and leave an inheritance for your children?

It can make quite a difference. Inheritance (theft) tax is chargeable on the estate of the persons who have died. It has to be paid before probity can be granted and the estate divided and sold. It is also based upon the government's assessment of the value of the estate, not what it is actually worth. So this can leave inheritors substantially out of pocket before they ever get their hands on any money. At last reckoning, IHT was chargeable on any part of the estate over $365k. (Though I'm sure Martin Luther will be attracted to this thread and correct me if I am wrong)

Bear in mind that the Tories have made it an election pledge to abolish IHT on estates values at less than £1,000,000. If they intend to win back the hearts and minds of the middle class voters - many of whom would be caught by the IHT net - then it's still realistic to assume that they will maintain this policy. Labour, being Labour, may attempt to steal this policy in an attempt to keep votes and hold on to power. So it could be that the next UK election will see the end of IHT for more of the middle classes.

Australia, being a civilised country, has long since abandoned such archaic taxes as IHT, and you are free to pass your estate on to your offsping, or the Salvation Army as you see fit, with no tax liability. However, there may be a Capital Gains tax liability if you later come to dispose of an asset that has increased in value - a house for instance - that you inherited.

I think that's right anyway. It's late at night, and I need some sleep. Martin Luther is probably the best man for this job. Or if you want to pay for professional advice, then I would recommend Allan Collet who often posts on these forums.

HTH,


S

Wendy&Mike

Good point. I assumed (due to you, your & you) that the OP was emigrating and their family inheriting from them - hopefully (for the OP) not for a long time.

Mike.

aus2be_OH

If your estate is £500k and you are married or a widow(er) then you would currently have no IHT liability as the government has allowed the surviving spouse to "inherit" any unused portion of the Nil Rate Band (NRB) of the first spouse (partner) to die.
The NRB (currently £315k) is like your Personal Tax allowance over which IHT is payable at 40%. Using both NRBs would effectively mean your estate could be worth £630k before IHT became an issue.

HTH
Darren

PoppetUK

Thanks for the responses. To clarify the circumstances.

OH and I moved to Oz last year and will be citizens in due course. Our family is back in the UK.

My mum and oh parents will most probably leave a share of their estate to their children. The question has been asked if they would be better to move to Australia with their estate now so that the UK government didn't hit them / their children with IHT heavily or if the estate would be hit either way.

JAJ

Where are the assets going to be located?

And are they seriously thinking of moving for solely this reason?

rabsody

Please bear in mind that the introduction of "death tax" is being bandied about in Australia right now, so just make sure you don't jump from the frying pan into the fire!