Non dom using offshore trust to avoid UK IHT
Question:
I am thinking of setting up an offshore trust while I still have non-dom status. Could you let me know:
(a) If the Trust would be free of any inheritance tax even after I lose non-dom status (after 17 years residence in UK).
(b) I have UK shares held by an offshore stockbroker. Can I put these into the Trust.
Thank you and regards,
Answer:
(a) If the Trust would be free of any inheritance tax even after I lose non-dom status (after 17 years residence in UK).
As a non dom you can form an excluded property trust which would be outside the scope of UK IHT for overseas assets. This applies even if you subsequently become UK domiciled (as it is the status of you at the date of settlement that is taken into account)
(b) I have UK shares held by an offshore stockbroker. Can I put these into the Trust.
You could but they would not obtain the IHT exemption if they are UK shares. You could however use an offshore trust holding an offshore investment company to hold the shares. There would then be an IHT exemption.
About the Author
The Author of this article/answer is our site Editor, Lee Hadnum. Lee is a rarity among tax advisers having both legal and chartered accountant qualifications. After qualifying a prize winner in the Institute of Chartered Accountants exams, he also went on to become a chartered tax adviser (CTA).He worked in Ernst & Youngs Entrepreneurial Services department for a number of years before setting up his own tax planning practice. He is now a full time tax author.
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