If you have assets in the UK above £325,000 your estate is likely to be required to pay UK Inheritance Tax (IHT) on your death at 40% of the value of those assets. If you are originally from the UK, you may also find that UK Inheritance Tax is payable at 40% on your worldwide estate.
The best advice is to contact us early to see if your have a UK Inheritance Tax problem. We can assist you in legal ways to reduce your UK Inheritance Tax exposure.
The interaction of the UK and Australian tax position on death is complex. Traps exist in the Australian and UK capital gains tax laws and in the UK’s Inheritance Tax laws. With appropriate planning these traps can be avoided. In fact, in certain instances the combined effect of UK Inheritance Tax on death and Australian Capital Gains Tax on the distribution/sale of an asset from a deceased estate may result in an effective tax rate of 87% (that is 40% UK Inheritance Tax and 47% Australian Capital Gains Tax).
The UK/Australian Double Tax Treaty does not grant a credit for the UK Inheritance Tax against the Australian Capital Gains Tax.
If you think that you may be affected by this issue, please contact us.