Real Estate Investor Magazine South Africa Real Estate Investor Magazine March 2018 | Page 60

UK TAX
UK Property Ownership
Making sense of
the tax implications
MANDY POTTER
Mandy Potter is a Chartered
Legal Executive at Bartons
Solicitors. She is a member
of STEP (Society of Trust and
Estate Practitioners).
F
rom 6 April 2017, the UK Inher-
itance Tax (IHT) law changed,
meaning the use of offshore com-
panies to own UK residential property
could no longer provide a shelter for
IHT. For deaths on or after this date, all
non UK domiciled persons will now be
liable to IHT at the rate of 40% on all
assets in the UK (including real estate)
if they are worth more than £325,000 at
the time of death.
Who is affected?
IHT is now chargeable on all UK res-
idential property,  regardless of own-
58
ership structure. These new IHT rules
affect all non-UK domiciled individuals
(non-doms) whether they are resident in
the UK or not.
Anyone who currently owns UK res-
idential property through a company
incorporated outside the UK or other
opaque vehicle will be liable to IHT on
the value of such UK property in the
same way as UK domiciled individuals.
The measure will apply to all UK res-
idential property whether it is occupied
or let and of whatever value. In the past,
UK property held in a company incor-
porated outside the UK (possibly held in
a non UK resident trust) was not a UK
asset for IHT purposes and therefore,
for non-doms, not subject to IHT.
In the light of these changes it is now
more important than ever for anyone
with UK assets including residential
property to put in place a valid UK Will.
What you can do
Different countries have different rules
around inheritance, succession, property
and tax. You need a Will that protects
your assets as much as possible and en-
sures that your wishes are carried out in
regard to your estate. It is vitally import-
ant therefore that any Will meets the re-
quirements in the country in which you
have assets and is legally valid.
MARCH 2018 SA Real Estate Investor Magazine
If a valid Will is not in place, the UK
Intestacy laws will determine how the
UK assets are distributed. This could
mean that unintended beneficiaries
could inherit and the distribution of the
estate under the intestacy laws may not
be the most tax efficient.
For anyone with UK assets requiring
a Will to deal with those assets, seek-
ing professional advice is essential. This
will ensure that it deals with the assets
in accordance with UK law and works
alongside any other Wills where there
are assets in other countries or legal ju-
risdictions.
A PROPERLY DRAWN
UP WILL
Include the appointment of
Executors who are responsible
for administering an estate
after death;
Set out who is to inherit the
estate (beneficiaries);
Make provision if one or more
of the beneficiaries have died
before the Testator.