The following Private Client guidance note provides comprehensive and up to date legal information covering:
FORTHCOMING CHANGE: Following the Inheritance Tax Review Call for evidence and Survey, which ran from 27 April and 8 June 2018, the Office of Tax Simplification (OTS) published its first report on 23 November 2018 and its second report on 5 July 2019. In its second report, the OTS recommended a number of reforms to inheritance tax (IHT), including to the operation of the normal expenditure out of income exemption, the potential exempt transfer run off period and the allocation of the nil rate band on death. Although it not yet known if any of the recommendations will lead to legislative changes, it is worth bearing the proposals in mind when considering and advising on IHT.
The UK does not have a specific wealth tax. However capital assets owned at death and some lifetime gifts or transfers, as well as some trust interests, are subject to inheritance tax (IHT).
For a UK domiciled individual (including any individual who is deemed domiciled in the UK at the relevant time—see below), UK IHT at death is generally payable at 40% on their worldwide assets (often with credit given for any equivalent tax paid overseas) whereas a non-UK domiciled individual will, in general, only pay IHT on assets situated in the UK. However, since 6 April 2017, IHT has also been charged on overseas property
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