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IHT on overseas property representing UK residential property


Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
tag-icon Autumn Budget 2024

IHT on overseas property representing UK residential property


Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
tag-icon Autumn Budget 2024
imgtext

This guidance note explains the rules that apply to the charge to inheritance tax on UK residential property held directly and indirectly by a non-domiciled individual.

Background to UK residential property held in offshore structures

Property situated outside the UK which is owned by a non-UK domiciled individual is outside the scope of IHT. Such property is designated as ‘excluded property’. See the Excluded property and situs of assets guidance note.

A person who is non-UK domiciled may limit their exposure to IHT on death by keeping some of their assets outside of the UK (taking into account any other local taxes that might apply to the jurisdiction in which they are held).

As a general principle, UK residential property should always be subject to IHT regardless of the domicile status of its owner because it is, by definition, situated in the UK. However, certain arrangements can be made which wrap up or ‘envelope’ property in overseas assets so tha the legal location (lex situs) of the underlying

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  • 01 Nov 2024 12:45

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