Guest Liz Hatton

Inheritance tax

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    Guest Liz Hatton

    Hi Im after some help please, I have a final salary scheme pension in the UK and have been told that I should consider moving it to Australia because if I were to die and have assets in the UK they will be subject to the UK inheritance tax but also any assets I hold here will also be subject to UK inheriatnce tax as I was previously UK tax resident. Is this correct?

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    There is a guy on here called Andrew Williams whos business is finance both here and the UK. He would be your best bet to answer this question I think. Its a mine field!!!!

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    Hi Im after some help please, I have a final salary scheme pension in the UK and have been told that I should consider moving it to Australia because if I were to die and have assets in the UK they will be subject to the UK inheritance tax but also any assets I hold here will also be subject to UK inheriatnce tax as I was previously UK tax resident. Is this correct?

     

    Hi Liz

     

    Firstly, if I can ask a couple of questions.

     

     

     

    • Where are you currently living?
    • Who is it that has told you this?

     

    I will try to give you a bit of background on the situation but I just want to understand how this has come about.

     

    Regards

     

    Andy

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    Guest Liz Hatton

    Hi Andy,

     

    I have been living here for 5 years and am now an Australian Citizen, I heard it second hand from someone who went to a tax seminar. I was under the impression that as long as Im not deemed domicile in the UK - I dont have any property there, just the super, then it wouldnt be an issue for us. Assets in the UK are less than the nil rate threshold but if you include Australian assets might be over. Many thanks for your help, Liz.

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    Hi Liz

     

    You are right in your thinking of being domicile, have a look here about domicile it is a very complex area, just leaving the UK does not necessarily mean that someone is not domicile, http://www.lawskills.co.uk/articles/counsels_opinion/where_are_we_on_domicile.html

     

    The longer the time spent after leaving the UK and the more connection to the new country someone has i.e home, citizenship etc certainly has a bearing on whether someone is no longer UK domicile.

     

    In any event, if you have a final salary pension I would not be making a decision to transfer based on potential inheritance tax, generally the main benefits paid from a final salary scheme on death are spouse and or dependents pensions which are not caught by IHT as they are not lump sums.

     

    If a lump sum is paid generally it is only quite small being 2 - 3 times the annual pension amount and there are no tax consequences between spouses on this unless it exceeds the Lifetime allowance (LTA currently 1.5Mill GBP).

     

    There can be some good reasons to transfer Pensions but you should do it for these reasons only after having an assessment of your whole situation and looking at where the retirement monies may be better off.

     

    Doing it for the reason of avoiding Inheritance tax generally is really not such a major factor.

     

     

    Regards

     

    Andy

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