THE PROBLEM
Mrs CF’s husband passed away. As a US citizen with non-UK domicile status, she faced an £870,000 inheritance tax bill.
WHAT WE DID — IHT
We brought in a US/UK tax expert. A domicile election cleared the immediate bill — but created a new problem: £1.97m in potential IHT on her worldwide estate. We researched the best solution: a 4-year life insurance policy to cover the liability, and planned a clean exit from the UK on her return to the US.
WHAT WE DID — DOUBLE TAX
Using the UK-US double tax treaty, we determined the US held taxing rights on her estate — with $0 due. UK inheritance tax: £1.97m, covered by a £1.97m life policy.
WHAT WE DID — NON-DOM & ISA
New non-dom rules meant foreign income could be brought to the UK at 12% rather than 40% income tax. We also transferred her late husband’s £380,000 ISA allowance into her own — shielding more assets from UK tax for the duration of her stay.
Complex doesn’t have to mean costly. We find the plan others miss.