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Can you put uk property into a panama foundation to avoid inheritence

Customer Question

can you put uk property into a panama foundation to avoid inheritence tax and is legal with uk law
Submitted: 9 months ago.
Category: Tax
Expert:  bigduckontax replied 9 months ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to be able to help you with your question.
You can and it is perfectly legal. However, the transfer would count as a disposal for Capital Gains Tax (CGT) purposes and any gain made would be subject to CGT at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of sale. You have an Annual Exempt Amount (AEA) of 11.1K to offset this gain. Furthermore, if the property has been let and you have at some time lived in it before or after the letting period then Lettings Relief (LR) up to 40K may be available too. If this is your sole or main domestic residence Private Residence Relief (PRR) will apply which relieves CGT at 100%.
If the property was let then for the last 18 months of ownership you are deemed to be in residence even if this is not the case and PRR is extended.
Remember Inheritance Tax (IHT) does not kick in until an estate exceeds 325K and is at a 40% flat rate on the surplus. A married couple survivor may inherit the unused portion of the deceased partner's 325K making a possible tax free zone of up to 650K. Furthermore if a family home is bequeathed to children then increasingly from 2017 through to 2020 the 325K will rise to one million under recently announced changes. This might make the whole transfer an unnecessary and possibly expensive complication.
I do hope that you have found my reply of assistance and given you some food for thought.

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