How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4951
Type Your Tax Question Here...
bigduckontax is online now

Regarding Inheritance Tax: If my father was domiciled in Hong

This answer was rated:

Regarding Inheritance Tax: If my father was domiciled in Hong Kong, where grant of probate was issued and his estate exceeds the the UK tax threshold of 325K am I still liable to pay UK inheritance tax since as a beneficiary I am based in the UK. Under HK law no tax would be due.
Hello, I'm Keith and happy to help you with your question. I am very sorry to hear of the death of your Father.
You are not liable for any Inheritance Tax (IT) on the decease of your Father. It is his estate which is liable through his executors. No tax would cascade down to you, although the quantum of your inheritance would obviously be reduced by any IT imposed, but it would never be your liability, save in one case. If your Father made a gift of moneys or assets to you within seven years of his death you might bd liable and even then only if his estate is insufficient to meet any IT due on the gift. Such gifts create Potentially Exempt Transfers (PETs). PETs run off at a taper over seven years and are added back to the deceased's estate, being the first to suffer IT. It is in that situation only, if the estate cannot meet the IT, would it ever become your personal liability.
I do hope I have helped set your mind at rest on this matter.
Customer: replied 3 years ago.

Hi Keith, thanks for your help, but I didn't feel you answered my question, maybe I wasn't clear enough.

I am the executor of the will. My father lived and died in Hong Kong and the grant of probate was issued in HK and he was domiciled there.

Therefore I need to know if the estate is liable to pay any UK inheritance tax, since under the laws of Hong Kong, none is due

Thank you


Stuart, I am a diabetic and must eat now. I will be back to you in response shortly.
Here is the Gov UK advice on IT liability of your Father [edited]:
'[Domiciled and resident] outside the UK [Assets] - in the UK (except excluded assets) So, as you surmise any estate in excess of 325K plus certain bequests (inter spousal, charitable) are liable to UK IT at 40% flat rate.'
So, Stuart, there is an IT liability based on his UK assets only to be met from your father's UK estate, but not you personally save for PETs which I have explained already. You can dismiss any HK estate from your mind.
I do hope that I have helped you with your question.
Customer: replied 3 years ago.

Hope you managed to get some lunch

There are NO UK assets to speak of, just money from a savings account and investment fund held off shore in the Isle of Man - so I assume those are exempt?

Breakfast, actually, as I am answering this question from the States!
In Isle of Man investment opens a potential can of worms. I will be back to you shortly; however I need to know precicely what is the IOM fund.
Customer: replied 3 years ago.

Its an Investment Fund held with Royal Skandia, arranged through a broker in HK

NB; my father had not lived in the UK since 1974, had no UK assets, he was domiciled in HK

HMRC's Inheritance Tax Toolkit includes the following gem:

'The Channel Islands and the Isle of Man are considered outside the United Kingdom (UK) for Inheritance Tax purposes.'

It would thus appear that the IOM fund does not comprise part of your Father's UK Estate as he was not domiciled or resident in the UK, leaving the savings account only. If the sum involved is small HMRC may not require you to complete an IT return at all.

I would be inclined to check with them for starters, might save a lot of hassle and form filling. At this stage a return appears to be an exercise in financial futility!

bigduckontax and other Tax Specialists are ready to help you
Thank you for your support.
Many thanks for the bonus too!