Tax Question. For Meow and other experts
Oct 20th 2013, 12:03 pm
#1
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Tax Question. For Meow and other experts
Ok.
Person A dies and leaves Person B money. Person A is UK resident, Person B is not.
Person B gives said money to person C. who is also non UK resident.
why would person C be subject to UK tax if person B dies within 7 years. Surely money has already left UK/UK tax system?
What can be done to get round the issue?
Person A dies and leaves Person B money. Person A is UK resident, Person B is not.
Person B gives said money to person C. who is also non UK resident.
why would person C be subject to UK tax if person B dies within 7 years. Surely money has already left UK/UK tax system?
What can be done to get round the issue?
Oct 20th 2013, 1:02 pm
#2
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Re: Tax Question. For Meow and other experts
Quick, broad answer which is not advice.
The gift forms part of person A's estate and the IHT liability related to them, not to the person receiving the gift. If tax is due it has to be paid from the monies paid.
IHT is payable at 40% on amount over the nil rate band, currently GBP 325,000 per person, or doubled for a married couple.
The monies are only a PET (Potentially Exempt Transfer) if the donor makes the gift when alive (say from person b) , rather than as part of an estate on death, and they must survive for a full seven years for the gift to fall out of their estate. If this person is UK domiciled then they are subject to UK IHT on their worldwide assets no matter where they are living.
It is quite common for a life policy to be taken out on the life of the donor to cover the potential tax liability. This is known as a 'gift intervivos' plan.
Hope that clarifies a little.
Sometimes I bore myself with this tax gubbins you know...
The gift forms part of person A's estate and the IHT liability related to them, not to the person receiving the gift. If tax is due it has to be paid from the monies paid.
IHT is payable at 40% on amount over the nil rate band, currently GBP 325,000 per person, or doubled for a married couple.
The monies are only a PET (Potentially Exempt Transfer) if the donor makes the gift when alive (say from person b) , rather than as part of an estate on death, and they must survive for a full seven years for the gift to fall out of their estate. If this person is UK domiciled then they are subject to UK IHT on their worldwide assets no matter where they are living.
It is quite common for a life policy to be taken out on the life of the donor to cover the potential tax liability. This is known as a 'gift intervivos' plan.
Hope that clarifies a little.
Sometimes I bore myself with this tax gubbins you know...
Oct 20th 2013, 1:07 pm
#3
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Re: Tax Question. For Meow and other experts
so knowledgeable
Thank you.x
So. What does UK domicile even mean? Both Person B and Person C have a UK passport but have not lived there for years and have no intention of returning.
Does this mean if the money is under 325,000 there is no tax payable at all? then we don't even need to be having this conversation?
Thank you.x
So. What does UK domicile even mean? Both Person B and Person C have a UK passport but have not lived there for years and have no intention of returning.
Does this mean if the money is under 325,000 there is no tax payable at all? then we don't even need to be having this conversation?
Oct 20th 2013, 1:11 pm
#4
Bored liberal
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Re: Tax Question. For Meow and other experts
so knowledgeable
Thank you.x
So. What does UK domicile even mean? Both Person B and Person C have a UK passport but have not lived there for years and have no intention of returning.
Does this mean if the money is under 325,000 there is no tax payable at all? then we don't even need to be having this conversation?
Thank you.x
So. What does UK domicile even mean? Both Person B and Person C have a UK passport but have not lived there for years and have no intention of returning.
Does this mean if the money is under 325,000 there is no tax payable at all? then we don't even need to be having this conversation?
Domicile is very different to residency. If they were bon in the UK (and their fathers were too) then they are likely to be UK domiciled. It's tricky to change your domicile but it can be done in certain cases.
All UK nationals have an allowance, known as the Nil Rate Band, and can leave a total estate of up to that value at time of death before there is any liability to Inheritance Tax.
Last edited by Meow; Oct 20th 2013 at 2:03 pm.
Oct 20th 2013, 1:22 pm
#5
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Re: Tax Question. For Meow and other experts
I'm still very confused.
Oct 20th 2013, 2:12 pm
#7
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Re: Tax Question. For Meow and other experts
all of it.
Oct 20th 2013, 6:02 pm
#8
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Re: Tax Question. For Meow and other experts
Ok.
Person A dies and leaves Person B money. Person A is UK resident, Person B is not.
Person B gives said money to person C. who is also non UK resident.
why would person C be subject to UK tax if person B dies within 7 years. Surely money has already left UK/UK tax system?
What can be done to get round the issue?
Person A dies and leaves Person B money. Person A is UK resident, Person B is not.
Person B gives said money to person C. who is also non UK resident.
why would person C be subject to UK tax if person B dies within 7 years. Surely money has already left UK/UK tax system?
What can be done to get round the issue?
Oct 21st 2013, 1:44 am
#9
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Re: Tax Question. For Meow and other experts
Because C would eventually inherit it from B. I don't even know how the UK tax system would even know about it let alone be entitled to getting some of it! 
Oct 21st 2013, 2:22 am
#10
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Re: Tax Question. For Meow and other experts
B 'giving to' C is very different from C 'inheriting from' B............. whether you are in the UK tax environment or not............. I think...............
Oct 21st 2013, 4:16 am
#11
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Re: Tax Question. For Meow and other experts
I just feel sorry for D, E and F, who's going to take care of them? G has a full-time job and I certainly wouldn't trust H.
Oct 21st 2013, 1:28 pm
#13
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Re: Tax Question. For Meow and other experts
There may be none left for anyone if HRH gets her paws on it!!!
Oct 22nd 2013, 8:58 am
#14
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Re: Tax Question. For Meow and other experts
The question can be paraphrased as
"How can I avoid tax without paying an accountant for sound professional advice ?"
"How can I avoid tax without paying an accountant for sound professional advice ?"
Oct 23rd 2013, 10:10 am
#15
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Re: Tax Question. For Meow and other experts
N.