A recent survey showed most UK residents think that assets such as property they hold outside the UK is excluded from inheritance tax, says the Financial Times.
They are wrong, because so long as you are domiciled in the UK, then, broadly speaking (and see below) all your worldwide assets are included in your taxable estate.
People living outside the UK, who may be non-resident for income tax purposes, will remain domiciled here unless they establish a permanent intention to reside abroad. Without the establishment of a new (non UK) domicile of choice then all their assets are potentially subject to UK inheritance tax. However some foreign assets, especially holiday property, may be subject to tax in the other country as well. This is one of the trickiest areas of tax and one where planning (and accessing any double tax treaties) can help mitigate both tax and hassle.
The establishment of a trust to hold non UK assets at the time you are non-UK domiciled (an excluded property trust) will mean, under the current law, that the property subject to the trust while it remains non-UK property will be outside of your estate for IHT…even if you subsequently become UK domiciled. This is so even if you can benefit under the trust. Specialist advice is of course required – as it is on all aspects of tax and investment planning for Non-Doms.