Andrew Goldstone presents a Q&A guide to personal tax, trusts, wills, and probate for those living in, moving to or investing in the UK.
First published in PLC Cross-border Handbooks 2008/09
Taxation – general
1. When does the tax year start and finish in the UK and what are the tax payment dates/deadlines?
The tax year runs from 6 April to the following 5 April. [Read More]
Taxes on gains and income
2. How are gains on property/assets owned by a foreign national taxed? What are the capital gains tax rates?
There is an 18% capital gains tax (CGT) on gains on the disposal of assets [Read More]
3. How is income received by a foreign national taxed? Is there a withholding tax? What are the income tax rates?
The income tax (ICT) rates are...[Read More]
Inheritance taxes
4. What is the basis of the inheritance tax or gift tax regime?
Inheritance tax (IHT) is generally paid at 40% on the deceased's estate [Read More]
5. Does the inheritance tax or gift tax regime apply to foreign owners of property/assets?
An individual who is not domiciled in the UK is subject to IHT only on his UK assets. [Read More]
6. What are the inheritance tax or gift tax rates?
On death, IHT at 40% is due on the deceased's assets that exceed the nil rate band [Read More]
7. Are there any other taxes on death or on lifetime gifts?
Generally, there are no other taxes payable on death. [Read More]
Buying property
8. Are there any other taxes that a foreign national needs to consider when buying assets/property in the UK?
Stamp duty land tax (SDLT) arises on the purchase of UK land and property at the following rates... [Read More]
9. What property holding structures are available in the UK?
An individual can hold property... [Read More]
International agreements
10. Has the UK entered into one or more double taxation treaty(ies) with other jurisdictions, so that tax suffered in your country is deducted from the other jurisdiction's tax liability and vice versa?
In relation to ICT and CGT, the UK has entered into double taxation treaties with many countries. [Read More]
Succession regimes
11. What is the succession regime in the UK (for example, is there a forced heirship regime)?
There is full testamentary freedom in England and Wales. There is no forced heirship regime. [Read More]
12. Is there a forced heirship regime in the UK?
It can be avoided (for example, by buying assets through an offshore or other entity...) [Read More]
13. Are property/assets owned by a foreign national subject to your succession laws or the laws of their original country?
If an individual domiciled in a foreign country dies owning immovable assets in England and Wales... [Read More]
14. Do your courts accept a reference back to the UK where your laws have referred the succession question back to the foreign national's home country and that country's courts have refused jurisdiction because the question concerns immovable property?
The courts apply the law of England and Wales to determine whether domestic law or that of... [Read More]
Domicile and residence
15. Does the UK have concepts of residence and domicile? In what context(s) are they relevant and how do they impact on a taxpayer?
The UK has concepts of residence and domicile, which are relevant in many tax and other contexts. [Read More]
16. Does the UK impose any tax when a person leaves (for example, an exit tax)? Are there any other consequences of leaving (particularly with regard to individuals domiciled in the UK)?
The UK does not impose an exit tax when an individual leaves. [Read More]
17. Does the UK have any particular rules affecting temporary residents?
A temporary resident (an individual who is in the UK for a temporary purpose, with no view... [Read More]
Overseas property
18. How are residents in the UK with property/assets overseas taxed?
An individual who is resident and domiciled in the UK pays ICT or CGT on income or... [Read More]
Trusts
19. Are trusts (or an equivalent structure) recognised in the UK?
Please describe the trust (or equivalent structure), including... [Read More]
20. Does the UK recognise trusts created for foreign persons that are governed by the law of another jurisdiction?
The UK has adopted the HCCH Convention on the Law Applicable to Trusts and on their Recognition 1985... [Read More]
21. What are the tax consequences of importing/exporting a trust to/from the UK?
Importing a foreign trust does not in itself trigger a tax charge. [Read More]
Wills and estate administration
22. Is it essential for an owner of assets in the UK to make a will in the UK? Does the will need to be governed by the laws of the UK?
It is not essential for an owner of assets in England and Wales to make a will there, but it is advisable. [Read More]
23. What are the formalities for making a will in the UK? Do they vary depending on the nationality, residence and/or domicile of the testator?
The statutory definition of a will in England and Wales includes... [Read More]
24. Is it possible to make a post-death variation (that is, are there any special rules which apply if testamentary provisions or the provisions of intestacy rules are varied after the date of death by the agreement of the beneficiaries, or are such variations treated as lifetime dispositions by the beneficiaries)?
Individuals commonly use post-death variations of wills (or of the provisions made under the intestacy rules)... [Read More]
25. Please describe how/to what extent wills made in another jurisdiction are recognised as valid/enforced in the UK. Does the UK recognise a foreign grant of probate (or its equivalent) or are further formalities required?
A will is recognised as valid if it complies with the law of the country where one of the following applies... [Read More]
26. Are there any particular practical issues that are relevant where individuals from another jurisdiction die in the UK?
Where individuals from another jurisdiction die in the UK, executors may find that certain assets have... [Read More]
27. What is the extent of the role of the executor(s) and what powers does he have? Who is responsible for the administration of the estate or does it vest in the heirs without vesting initially in the personal representatives?
Executors and administrators are responsible for administering the deceased's estate. [Read More]
28. What is the procedure on death in the UK for tax and other purposes?
A grant of representation (for example, a grant of probate if there is a valid will) is usually required to... [Read More]
29. Are there any time limits/restrictions/valuation issues that are particularly relevant to an estate with a foreign element?
The IHT account must be filed with HMRC within 12 months from the date of death. [Read More]
30. Is it possible for a beneficiary to challenge a will/the executors/the administrators? If so, how?
The following individuals can make a claim for financial provision out of the estate if... [Read More]
Co-ownership
31. What are the laws regarding co-ownership and how do they impact on taxes, succession and estate administration?
Two types of joint ownership exist in England and Wales... [Read More]
Familial relationships
32. What is the relevance of matrimonial regimes in trust or succession law (that is, what regimes, if any, are there)? Are the rights of cohabitees/civil partners (whether in same-sex couples or otherwise) in property or other assets protected by law?
Matrimonial regimes do not exist in England and Wales. [Read More]
33. Please describe how the following terms are defined in law
Divorce means the dissolution of a marriage other than by death. Marriage means... [Read More]
Minority
34. What rules apply during the period when an heir is a minor?
On the intestacy of the deceased, a minor's interest is held on "statutory trusts" until he is 18. [Read More]
Capacity
35. What happens when a person loses capacity? Does the UK recognise powers of attorney (or their equivalent) made under the law of other jurisdictions?
When a person loses capacity, their appointed attorney, or a lasting power of attorney... [Read More]
Intestacy
36. What, different rules, if any, apply to the intestate?
The applicable rules depend on whether there is a surviving spouse or civil partner and whether... [Read More]