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U.S. advisors sometimes are confronted with situations in which a client owns residential real property in the United Kingdom. The question inevitably arises, “How will that property be taxed on my death?” The bottom line? Former planning solutions, such as owning that U.K. residential property in an offshore entity, may no longer avoid or mitigate U.K. inheritance taxes.
U.K. Inheritance Taxes
Inheritance taxes (IHT)1 in the United Kingdom are subject to an exemption amount (established by the Chancellor of the Exchequer and known as the “nil rate band”), which is currently set at £325,000 with a portability provision that increases the exemption to £650,000 for spouses or civil partners.2 The tax is payable at
40 percent on the amount o...
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