• IHT implications for those based in the UK for 15 years: from 6th April 2017, the calculation used to determine when a foreign expat living in the UK becomes deemed British domiciled for tax purposes has tightened. The timescale has now dropped from 17 out of 20 years to 15 out of 20 years. If you are approaching the 15-year deadline, you may need to take advice regarding inheritance tax (IHT), as once you become deemed UK domicile, you are liable to IHT on your worldwide assets (not just UK assets).
  • Foreign expats living in the UK can choose to pay tax on a ‘remittance basis’, which means they are not required to pay UK tax on their foreign assets. Once a foreign expat has been in the UK for five years, they need to start paying HMRC a charge annually to remain on the remittance basis.
  • From 6th April 2017, foreign expats investing in UK property through an overseas corporate structure or trust are no longer excluded from IHT. The HMRC now omits the corporate structure, making them ineffective from an IHT planning perspective. If you hold UK property through one of these structures it might make sense for the structure to be unwound as it may no longer be effective and may not justify the fees involved.
  • Maximise ISA and pension contributions – if you live and work in the UK (paying UK income tax) you are able to invest in ISAs and pensions and benefit from tax efficient investing in the same way as those who were born in the UK. This can help your investments grow tax efficiently while you are in the UK, and you can continue to hold the investment when overseas.
  • Utilise Capital Gains Tax (CGT) allowances – as a foreign expat living in the UK, you will be liable to UK CGT on your UK and worldwide investments (if you are on the remittance basis you will be liable to UK CGT on your UK assets only). This means you are entitled to the annual tax-free allowance of £11,100. Making the most of the annual allowance by selling investments and recognising the gain on a regular basis could prove effective.
  • Access annual gift allowances – on death, you will be liable to UK IHT on your UK assets. You will also be liable to UK IHT on your worldwide assets if you have been in the UK for 15 years. Utilising the annual gift allowances of £3,000 a year can be an effective way of passing wealth onto future generations on a drip feed basis, rather than waiting and storing up future IHT problems. As a foreign expat, you have legitimate tax planning opportunities available to you, in much the same way as UK nationals do. It is important to seek professional advice before the tax year-end deadline to maximise these opportunities and ensure your finances are structured in the most effective way possible.