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What happens to your property when you die

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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 you have recent ancestors (2 generations) who came from the UK, then this article may not help and you should take separate advice regarding your domicile. If you are UK tax resident, then this article is not relevant to you.

‍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 band rate. 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 band rate 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 band rate 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 £270,000, the partner will inherit:
    1. all the personal property and belongings of the person who has died, and
    2. the first £270,000 of the estate, and
    3. half of the remaining estate.
  2. If there are no surviving children, grandchildren or great-grandchildren, the partner will inherit:
    1. all the personal property and belongings of the person who has died, and
    2. 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 which are intended only to alert you to the need to consult a UK solicitor.

This is VERY complicated. You are strongly advised to consult your UK solicitor and make an English Will.
For help with this or any other taxation matter, get in touch

The information contained in this article is believed to be correct at the time of publication. The content of this article is intended to be a brief summary of the principal points of the legislation or proposed legislation only, and it is provided for general guidance only. It may not take into account subsequent changes in the law and of necessity it omits much detail. Taxation is a complicated subject and is subject to change. You should only rely on advice prepared specifically for you. Neither the writer nor Landlords Tax Services Ltd can be held liable for any loss arising from any act or omission by you as a result of your understanding of this article. If the subject matter is of interest you should contact us to see if there is a relevant update, and to take professional advice which takes into account your circumstances.

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