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INHERITANCE TAX

Inheritance tax is one of the fastest growing taxes for UK Government. With rising property prices and allowances remaining relatively static until very recently, it is no longer a tax for the very wealthy. Those of relatively modest means can incur a significant charge against their Estate before it is distributed to their heirs.

UK Inheritance tax is charged on all UK based assets regardless of your nationality and on your worldwide assets if you are ‘domiciled’ in UK. Domicile has little to do with where you are living at the time of your death and is a term used to Her Majesty’s Revenue and Customs (HMRC).

Although not exclusively associated with transfer of value on death, this is when most people first encounter this charge, the rate of tax applied on death is 40% after allowances and exemptions.

Gifting strategies using allowances, exemptions and legal structures can reduce this liability and result in more of your assets being passed on to your heirs and less to the taxman. Speak to us about how this tax may affect you and what measures can be taken to minimise its effect on your Estate.

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WHAT HAPPENS IF I DO NOT HAVE A WILL?

Why pay for a Will, if you do not need it? In some circumstances, there is no need for a Will. However, for expatriates living in UAE, this is very rare.

Where no valid Will exists or no Will can be found the deceased will be treated as having died ‘intestate’. The treatment of the deceased’s assets depends on factors such as where the assets are located.

For assets in UK, married couples with children have a right to all of their deceased spouse’s personal effects as well as the first £250,000 of the estate plus half of any amount over £250,000. The balance is distributed evenly between the children. This can cause problems. For instance, where the main asset is the matrimonial home and one of the children wants their inheritance causing the property to be sold.

Where there are assets in UAE and there is no Will the situation is complex, local law requires a Sharia scholar to be appointed. This person will oversee the distribution of the assets within UAE in accordance with Sharia principles. The distribution will depend on the relatives of the deceased and others who may make a legitimate claim on the assets such as lenders.

For further information, please contact us.

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