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bigduckontax
bigduckontax, Accountant
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If a UK resident and domiciled person, sets up an off shore

Resolved Question:

if a UK resident and domiciled person, sets up an off shore trust for a UK domiciled but not UK resident person in The Seychelles, -( where there is no inheritance tax and no tax on these trusts), is that money still liable for UK IHT? - assuming the person gifting the money doesn't survive another 7 years?
Submitted: 10 months ago.
Category: Tax
Expert:  bigduckontax replied 10 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

The setting up of this trust would constitute a gift so it would create a Potentially Exempt Transaction (PET) in the IHT affairs of the donor. PETs run off at a taper over seven years and in the event of a decease within that time would be added back to the donor's estate for IHT purposes. PETs are the first to suffer IHT and if the deceased's estate is insufficient to meet the tax on the PET is cascades down to the beneficiary for immediate payment.

The classic defence against a PET is a reducing life insurance policy.

I do hope that you find my reply of assistance.

Customer: replied 10 months ago.
thank you for your reply, - better start looking for life insurance policies?
Expert:  bigduckontax replied 10 months ago.

Night be an idea!

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Expert:  bigduckontax replied 10 months ago.

Thank you for your support.

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