Inheritance Tax

Inheritance Tax planning need not be complicated.  There are many simple and sensible actions that you can take to reduce the impact of Inheritance Tax. 

It is VERY important that you plan as it will save you money and save further distress for your family.  This is particularly so in Spain.  In Spain, when there is a transfer of wealth the RECEIPIANT is assessed for inheritance tax.  Our UK clients do not expect this because in the UK there is an interspouse exemption,  For many expat couples in Spain their life, and their expat lifestyle, is shattered when the first partner dies.  When the survivng partner has to find a large sum to pay inheritance tax, often the ONLY option is to sell the house.  On top of this, dealing with these legal matters in Spanish and the Spanish system is more than a little daunting.  Good planning, regularly reviewed, helps reduce both the amount of tax and the associated distress.

The UK also has a concept that many British expats find difficult to grasp.  Yet it is a REALLY important issue.  The UK (and the USA) have two types of tax position.   All British expats are familiar with the concept of residency. Basically, residency is where you live (simplified description) but domicile is something VERY different. 

What is the difference between Residency and Domicile?

 Residency relates to Income tax and Capital Gains Tax.  Domicile relates, for British expats, to their liability to UK Inheritance tax.

Domicile

If you were born in the UK or have British parents it is VERY difficult to avoid UK inheritance tax.  Here are some examples:

I live in Spain and have done so for 35 years.  I have NO assets in the UK.  You are still likely to be UK domiciled and liable to UK inheritance tax

I live in Spain but don't expect to pay UK Inheritance Tax because I have few assets in the UK.  UK Inheritance Tax is assessable on your Worldwide assets.

 I spend less than an average of 90 Days in the UK and pay taxes in Spain so I won't have to pay UK Inheritance Tax.  The 90 day rule relates to residency and NOT domicile.  Unless you have taken very specific and draconian measures to remove your UK Domilice status you will STILL be liabe to UK Inheritance Tax.

For a free review of your Inheritance Tax situation please contact us  

Fortunately,  there are many things you can do to reduce, and sometimes even elliminate, both UK and Spanish Inheritance tax.

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