Today I learnt, if you retire abroad you're still on the hook for UK inheritance tax for ten years

[Another2Cats]

I'm not too sure if I've just had my head under a rock all this time and this is common knowledge but I was really suprised to find this out.

For context, relatives of mine who are retired have a holiday home in Portugal and they have now decided to sell up in the UK and move to Portugal permanently.

Apparently, in last year's budget the rules were changed so that if you die within ten years of leaving the UK then you still have to pay UK inheritance tax (IHT) on your entire worldwide estate (not just any assets left in the UK).

So, if you've lived your entire life in the UK and then decide at the age of 75 to sell up and move abroad then, if you die before the age of 85, your entire estate is still subject to UK IHT.

Just another thing to have to consider if you're thinking about retiring abroad.

And this. The person leaving the UK has no doubt paid tax on earnings, tax on pretty much everything they buy with their already taxed earnings.

Yes, but people who earn average salaries are rarely going to have six figure sums in savings, are they? For many people desperate to buy a home near where they work and have friends and family, the big obstacle is getting a large enough deposit together. An inheritance could solve that. By my definition of life-changing, that fits.

Although for a couple leaving the money to kids the threshold is £1mill ( for estates under £2mill)

This is incorrect. I’m following this as my parents left around 20 years ago. However they didn’t sell their flat until 5 years ago. It used to be 17 years from severing final link under deemed domicle rules. Now
its just 10 years not being tax resident, which is much easier.

I don’t think that will help. Need 10 years of not being uk resident

? giving up uk citizenship doesn’t help

??
oh
@Erin1975 said it did

< off to Google >

My first line was if they have UK property!

Yes but it doesn’t help.

The old rules were based on deemed domicile and it was very difficult to leave the UK tax net for IHT purposes - you basically had to sever all UK links AND it took 17 years.

Under new rules it’s 10 years of not being tax resident.

Well if they didn’t pay IHT in the UK, they’d have to pay it in their new country. Surely better that the money goes to the country that has schooled them, provided healthcare etc for 75 years of their life?

Many countries, at least in EU, either don't have IHT at all or have it way much more generous then the UK

I live in France and have no property in the UK. My estate is too small by a long way to attract UK IHT, but here it’s the recipient who’s taxed at a varying percentage depending on the relationship, so my kids will pay 20% after an initial allowance of 100k each in property and 31k in cash. I’ve had friends return to the UK to avoid French IHT!

There’s Zero IHT in Guernsey and when you’ve already paid 40% tax in the U.K. for most of your life and
not had free education
or
healthcare

i think people will weigh up the benefits of moving

Tbh even with the 40% paid alone it’s fine to put yourself and your family first

Lefts face it the majority leave nothing to the tax man when they pass away and continue to use the nhs etc until they do.