Newsletters

WHAT HAPPENS TO YOUR UK PROPERTY WHEN YOU DIE?

Published 26th February 2019

A guide for those who are not domiciled in the UK, and not UK resident

If you live outside the UK and have neither you nor recent ancestors came from the UK then this article applies to you. If either you are tax resident in the UK or have recent ancestors (2 generations) who came from the UK, then this article will not help and you should take separate advice.

There might be Inheritance Tax (IHT) to pay, and UK law sets out who inherits the property.



TAXES PAYABLE

  • The first £325,000 of your estate is tax free. The tax free band is called the NIL Rate Band. For UK residents, this may be extended if your principal residence is left to a child or grandchild.

  • Bequests from the first spouse to die to the survivor are tax free.

  • Any part of the NIL Rate Band that is not used on the first death may be used on the second death of a couple.

  • Any amount in excess of the NIL Rate Band is taxed at 40%.

  • Giving away the property is only completely effective if you survive seven years after the gift (the last four years have a reducing rate).



WHO INHERITS

Many non-residents forget that who gets the UK property on the death of the owner is controlled by English Law.

NON-RESIDENTS: please note that the transfer of ownership will not be influenced by the law in your own country.

If you make an English Will, that determines ownership after your death.



SO WHAT HAPPENS IF THERE IS NO WILL?

If the UK property was owned jointly, the surviving joint owner automatically inherits the property.


But if this is not the case then:

1) If there are surviving children, grandchildren or great grandchildren of the person who died and the estate is valued at more than £250,000, the partner will inherit:

  • all the personal property and belongings of the person who has died, and
  • the first £250,000 of the estate, and
  • half of the remaining estate.


2) If there are no surviving children, grandchildren or great-grandchildren, the partner will inherit:

  • all the personal property and belongings of the person who has died and
  • the whole of the estate with interest from the date of death.



This is only a simplified view of taxes and inheritance on death. You should not rely upon it when planning your own estate, but must take advice from a solicitor who is in possession of all the facts of your case. We cannot accept responsibility should you act or refrain from acting based on the foregoing rough notes.


This is VERY complicated. You are strongly advised to consult your UK solicitor and make an English Will.