Is ‘old blighty’ blighted? Should you return?
Asks David Semmens a partner in the Private Wealth Team.
Are you an Ex-Pat thinking of returning to the UK? Maybe now is the time to think again.
Even ignoring all our current UK woes like Brexit uncertainty, a gridlocked parliament, teetering companies, a plummeting pound and so forth, there are always Benjamin Franklin’s two certainties that may persuade you to stay where you are anyway. Death and taxes. More succinctly, UK inheritance tax.
Yes, there is inheritance tax in Switzerland but the rates are minimal and in most cantons even children and grandchildren are exempt beneficiaries. In Italy the nil rate band (the tax free amount) is generous and the rates of tax above are much lower than in the UK. In France there is a significant nil rate band for each child that may inherit. There is no inheritance tax in Austria not to mention Australia and New Zealand.
However, none of this is much good if you live abroad but have not lost your sticky UK ‘domicile of origin’.
Retaining too many connections with the UK will mean that you are still UK domiciled. UK inheritance tax will therefore be charged on your net worldwide estate when you die, if it passes to anybody other than your same domiciled spouse or civil partner.
To lose your UK domicile you should sever all those old links. Sell any British property and investments and resign your club memberships. Any British assets you own at your death will attract UK inheritance tax anyway, regardless of where you live or your domicile, though you will always have your UK nil rate band of £325,000, or £650,000 if you can claim a previously deceased spouse’s tax free amount. So, all of this may be reason enough to sell your London property or portfolio of UK shares.
It may be worth considering taking up the citizenship of your country of residence to cement your relationship there and to show you intend to make it your permanent home. Though unfortunately this will prevent you from applying UK succession law in your Will if you live in Switzerland, although the Swiss Federal Government is planning to allow this. Nevertheless, you can now apply UK succession law in your Will in most other EU countries provided you retain your UK passport, even if you take up the citizenship of where you are living.
So whatever emerges from the current stagnation in the UK, it may be best to remember those two certainties before making the big move back as, unlike the UK’s current woes, there’s nothing more certain than death and taxes.
If you have any queries, please contact David Semmens on 01892 506010 or email@example.com.