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bigduckontax, Accountant
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I'm a British national. I live and work in HK and have not

Customer Question

I'm a British national. I live and work in HK and have not been resident in the UK for over 20 years. If I die would my estate be liable for uk inheritance tax? My 2 grown up children would benefit equally from my estate (they both live in the UK)
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

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

First things first; when you left these shores 20 years ago did you complete a Form P85 and send it to the Inland Revenue as it was then? If you did not you should do so immediately, but of course to HMRC; fortunately the form is available on the web and can be filed on line. On receipt that Department will classify you as non resident from your date of departure.

The site gives further guidance about how to achieve a change:

'Changing your country of domicile

While there is no single legal definition of your country of domicile, it will often be established according to three factors: where you were born, if you have assets in that location and where your father was born. When it comes to determining your country of domicile, the tax man will interpret the conditions and draw their own conclusion about whether you are still domicile in the UK. Due to inheritance tax being such a major revenue earner for the UK government, changing your domicile can be a difficult and stressful process - and even then your efforts may not be considered enough.

Changing your domicile tax status requires much more than simply showing that you now live abroad, you also have to be able to prove that you have no intention of returning to your original country of residence. You can attempt this in a number of ways, including:

  • Relinquishing your UK passport
  • Severing all links with social organisations and join new organisations in your country of residence
  • Purchase property in your country of residence and selling all your UK based property
  • Closing UK bank accounts

However, as it is the preserve of the UK tax man when it comes to determining whether your country of domicile has changed, this is the less recommended of the two approaches. Of course, you may also then be subject to inheritance tax in your new country of domicile. Before beginning on this path, ensure that you have spoken to an adviser to have all the facts and information.'

You definitely need to engage a trusted, experienced professional in UK domicile to manage your case for you.

Experts for Expats advice:

'Even if you are an ex***** *****ving outside of the UK, you will still be subject to inheritance tax in the UK if you are deemed to be of a UK domicile status.

If you are UK domicile and your estate is valued at over £325,000 your estate will be subject to inheritance tax - either 40% or 36% on the amount over the threshold. Since 2007, this threshold has increased to £650,000 for married couples and civil partners, providing the executors transfer the first spouse/partners unused inheritance tax threshold to the second partner when they die.'

It takes over 16 yreas or so to change your domicile. I woyuld suggest in your position you should take steps to have your domicile formally changed to escape UK IHT.

Customer: replied 1 year ago.
no didn't complete the form p85.. I have been living and paying tax in other countries and of course can prove this.
Expert:  bigduckontax replied 1 year ago.

Please do the P85 procedure. It will aid an application to change your domicile by indicating that you no longer think of the UK as your home country.