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 Inheritance tax and expats

Inheritance tax, death duties, estate tax call it what you want, but it is the tax due on your assets in the event of your death.  The amount of money some governments collect through taxes on death can be significant:

  • In the UK inheritance tax is charged a rate of 40%

  • In the US the Federal rate can be as high as 45%, plus possibly state taxes

  • In France death duties can be as high as 60%

Even if you're living in a country which has no such tax, and there aren't many that do not apply some form of death duties, do not think that you will escape inheritance tax from your country of origin.

e.g. If you were originally from the UK and now live in another country, you would still be liable for UK inheritance on any assets you hold in the UK. You could also be liable for UK inheritance tax on the assets you hold overseas too.

This is because inheritance tax does not always follow the same rules as income tax, because it is based on your  "domicile" or where you are "deemed domicile". If you are domiciled or deemed domicile in the UK, you could be liable for UK inheritance tax on all you assets worldwide in excess of £300,000, at a rate of 40%.

It is possible to change you domicile, but there are no hard and fast rules as to what constitutes a change of domicile. But doing some of the following would help to show you have changed your domicile

  • Living in the another country

  • Effecting a local will

  • Working or starting a business there

  • Making funeral arrangements there

  • Having your family live with you there

  • Sell all of your property in the UK

  • Buying a house in another country

However the UK tax authorities will apply what is known as a "deemed domicile", and treat your estate as UK domiciled if you were:

  • domiciled in the UK at any time in the three years before your death  or

  • resident in the UK for 17 out of the previous 20 years before your death

If you're not treated as UK domiciled then only the assets in the UK are potentially liable to inheritance tax.

As you can see from the above example inheritance tax can not be avoided by simply moving overseas. And it is not just UK citizens who have moved overseas that face this problem. It applies to many nationalities.

But inheritance tax can be avoided, and it can be avoided perfectly legally by using some of the following methods:

  • Using specialist Trust arrangements

  • By investing in certain assets

  • By carefully arranging your Will

  • Gifting assets before your death

It is important to act sooner rather than later when it comes to inheritance tax - we all know we're going to die at some point, and putting steps in place to avoid long before your death can avoid inheritance tax completely.

So if you’re an expatriate, and want to know more about offshore products or want to speak to an  offshore independent financial advisers, then contact us - free and without obligation on +353 874 641 868 or contact us online. is a marketing website which will put you in touch with an offshore independent financial adviser. does not provide financial advice and is not responsible for any advice you receive. .

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