IHT on UK residential property held indirectly by non-domiciliaries from 6 April 2017
Produced in partnership with James Brockhurst of Forsters LLP
IHT on UK residential property held indirectly by non-domiciliaries from 6 April 2017

The following Private Client guidance note Produced in partnership with James Brockhurst of Forsters LLP provides comprehensive and up to date legal information covering:

  • IHT on UK residential property held indirectly by non-domiciliaries from 6 April 2017
  • Overview of UK residential property holding structures
  • Trusts
  • Legislation
  • De minimis provision
  • Definition of residential property
  • Deductions for companies and partnerships
  • Chargeable events
  • Gift with reservation of benefit (GROB or GWR) rules
  • Valuation
  • more

This Practice Note summarises the changes to the excluded property rules from 6 April 2017 introduced by the Finance (No 2) Act 2017 (F(No 2)A 2017). Under the changes, UK inheritance tax (IHT) will apply to UK residential property held by (or for) a non-domiciliary directly or indirectly, unless it is held through a diversely held vehicle.

Overview of UK residential property holding structures

Prior to 6 April 2017, a non-UK domiciled individual was not liable to IHT on the value of UK residential property if the property was owned by an offshore company or other opaque structure (such as an offshore partnership).

Where a non-UK domiciliary owns the shares in an offshore company, before 6 April 2017 they held non-UK situated assets which were not subject to IHT. See Practice Notes: IHT—anti-avoidance provisions—Excluded property and domicile status and Situs of assets for succession and IHT.

Prior to 6 April 2017, it was standard tax planning for a non-domiciled individual to own UK residential property via an offshore company. See Practice Notes: UK home ownership structures for non-UK domiciliaries—outline and UK home ownership structures for non-UK domiciliaries—offshore company.

Trusts

The April 2017 changes extend IHT to UK residential property held indirectly by offshore trusts, whether the settlor is UK domiciled or not.

This note focuses on the position where the interest in