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INHERITANCE TAX

Inheritance tax is one of the fastest-growing taxes for the 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.

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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 by Her Majesty’s Revenue and Customs (HMRC).

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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.

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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?

In England & Wales, where no Will exists the deceased will be treated as having died ‘intestate’. For assets in the UK, married couples with children have a right to all of their deceased spouse’s personal effects as well as the statutory legacy sum (up to £322,000 from 26th July 2023). If the estate is worth more than the statutory legacy sum, 50% of the excess is passed to the surviving spouse and the remaining 50% is distributed equally between the deceased’s 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 for expatriates, multiple factors such as family structure, type of asset, and the religion of the deceased are taken into consideration when the courts decide how to distribute the deceased’s assets. Recent changes in federal legislation have sought to improve clarity for non-Muslims and time will tell how each Emirate adopts the federal law.

For further information, please contact us.

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