14 April 2023

Avoiding Unwanted Tax Liabilities When Buying a Home in the UK - Xavier Nicholas writes for Abode2

Alongside identifying quality support on conveyancing, it is essential that international buyers seek legal advice on the tax implications of acquiring a home in the UK.

Unexpected tax liabilities can surprise the unprepared, while well-advised buyers will have the best chance of limiting their exposure.

The main concern will be inheritance tax (IHT). Non-UK domiciled individuals are subject to IHT at a rate of 40% to the extent that the value of their UK estates exceeds the tax-free ‘nil rate band’ allowance (NRB). At a modest £325,000 (or in some cases, £500,000), the limited scope of the NRB can come as a shock to those relocating from (say) the US, where the amount that can pass free of federal estate tax is currently $12.92m.

Owing to significant changes in legislation over recent years, the options for mitigating IHT are limited. Good advice is needed to navigate the rules successfully and ensure that ownership arrangements are tax efficient. Planning might include securing the exemption that applies to transfers on death between spouses and civil partners, using debt to reduce tax exposure, specialist life insurance, and (in some circumstances) co-ownership of a property with children.

In all cases, buyers should take advice before completing a purchase, as some forms of planning may not be effective if put in place later on.

Special attention is needed for those who will continue to be subject to tax in another jurisdiction. Double taxation agreements and cross-border reporting may add to the need for a pre-purchase check-up. For those with a US connection, acquiring a property in the UK makes specialist advice on US-UK estate planning a must-have.

UK tax legislation, with all its complexity and intricacies, has a habit of leading the way in making the case for fact-specific legal counsel. Pre-purchase tax advice should be at the top of the to-do list for those thinking of acquiring a home in the UK.

This article was first published for the Abode2 luxury property publication, which can be accessed here.

For more information on our services for individuals and families relocating to the UK, see here.


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Moving to the UK is an exciting life event whether it be a short-term move for work to explore business prospects or a more permanent relocation with the whole family; the UK offers an eclectic range of options to live, work and learn, from the cityscapes of London to vineyards in the English countryside and historic university towns in-between. Setting up life in a new country can feel daunting too and it can be difficult to know where to start.

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