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UK Inheritance tax (+offshore investments)

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intelligentBoxer

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Aug 31, 2021
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#1
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Hey guys, is there a way to offshore investments to avoid UK IHT tax, preferably without relocation? I have $3m, across a property, ETF's and pension. (All legal) I'd hate giving HMRC $1m or more if something happens to me. I was thinking of setting up a Nevis LLC, owned by a trust, with nominee holders. What bank account should I then use. Will the CRS (Nevis is a member) ruin the anonymity of these accounts? Otherwise, what are the best options to keep my money invested, and safe? Could I use a Nevis LLC to buy a UK property to avoid having it on my name
 
#2
It's very, very situational (each situation has unique circumstances that affect the end result) and hard to give a meaningful, actionable answer to.

But a key factor is going to be timing. Any structure you set up needs to be set up in well enough in advance that it can be reasonably considered set up in good faith and not for the purpose of avoiding tax. I.e., if you're about to pass away in the next one or two years (hopefully not!), then it might be too late to set up something offshore that would hold up with the HMRC takes your beneficiaries to court. The courts would in such a case likely to deem it a fraudulent conveyance and declare the structure null and void for any tax saving purposes.

Speak with fiduciaries and trustees in jurisdictions popular with these types of arrangements (Isle of Man, Jersey, Guernsey, Bermuda, Caymans, BVI, Cook Islands) and explain your situation. Start there, but they might guide you towards Nevis or Samoa or other asset protection type jurisdictions. These service providers will help you find solutions.

Additionally, speak with a local attorney who understands UK law. Make sure that what you're doing is actually legal. There might also be less exotic ways to if not avoid then at least reduce inheritance tax.
 
#3
Sols said:
It's very, very situational (each situation has unique circumstances that affect the end result) and hard to give a meaningful, actionable answer to.

But a key factor is going to be timing. Any structure you set up needs to be set up in well enough in advance that it can be reasonably considered set up in good faith and not for the purpose of avoiding tax. I.e., if you're about to pass away in the next one or two years (hopefully not!), then it might be too late to set up something offshore that would hold up with the HMRC takes your beneficiaries to court. The courts would in such a case likely to deem it a fraudulent conveyance and declare the structure null and void for any tax saving purposes.

Speak with fiduciaries and trustees in jurisdictions popular with these types of arrangements (Isle of Man, Jersey, Guernsey, Bermuda, Caymans, BVI, Cook Islands) and explain your situation. Start there, but they might guide you towards Nevis or Samoa or other asset protection type jurisdictions. These service providers will help you find solutions.

Additionally, speak with a local attorney who understands UK law. Make sure that what you're doing is actually legal. There might also be less exotic ways to if not avoid then at least reduce inheritance tax.
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Aren't the names hidden/nominee from HMRC and if I fund through cash/crypto there shouldn't be any direct link?
 
#4
intelligentBoxer said:
Could I use a Nevis LLC to buy a UK property to avoid having it on my name
Click to expand...

Waste of money. Each year you would have to pay a never ending increasing ATED on the property. Offshore property ownership loophole was closed years ago in UK btw. You would also be deferring IHT and not avoiding it totally.

Your best chance to avoid IHT is:

1. Do not die :(
2. Gift the assets 7 years before you die.
 
#5
intelligentBoxer said:
Aren't the names hidden/nominee from HMRC and if I fund through cash/crypto there shouldn't be any direct link?
Click to expand...
A good structure like this should not rely on secrecy to be successful. Secrecy can be a part of it but if it stands or falls based on secrecy, you're at least a decade too late.

You're not just planning for today. You're planning for many years in advance, when secrecy will be even more eroded than today.

Even today, CRS and FATCA pierces nominees and goes directly to the UBO, beneficiary, or settlor.
 
#6
Martin Everson said:
Waste of money. Each year you would have to pay a never ending increasing ATED on the property. Offshore property ownership loophole was closed years ago in UK btw. You would also be deferring IHT and not avoiding it totally.

Your best chance to avoid IHT is:

1. Do not die :(
2. Gift the assets 7 years before you die.
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I see your point. Problem is you never know when you're gonna hit the bucket. Do you think a Dubai company + bank as advertised here would be a good choice to hide the assets?
 
#7
Sols said:
A good structure like this should not rely on secrecy to be successful. Secrecy can be a part of it but if it stands or falls based on secrecy, you're at least a decade too late.

You're not just planning for today. You're planning for many years in advance, when secrecy will be even more eroded than today.

Even today, CRS and FATCA pierces nominees and goes directly to the UBO, beneficiary, or settlor.
Click to expand...
Interesting, I'll take that on board. But what about the typical AUE company setup? I've read many guys hide their assets there, or will it be found out eventually
 
#8
Most of them don't exactly hide assets there, in any unlawful way. They set up lawful residences in UAE, relocate there to become subject to only UAE law, and then entirely in line with the law amass their wealth while resident there. When they leave and move back to where they came from or somewhere else, that wealth might be subject to wealth tax (if there is any) and the wealth becomes taxable under inheritance tax laws.

There are of course people who don't actually live in UAE and use this setup to violate tax laws. They will eventually get caught, when pressure from OECD, EU, US, and other shifts to UAE in the future.
 
#11
intelligentBoxer said:
why not?
Click to expand...

Ownership of any business Dubai or other is included in your IHT. You will get no IHT business relief also if Dubai company just owns the property and stock investments.

intelligentBoxer said:
what do others do in a similar position in general
Click to expand...

1. Cry
2. Transfer 7 years before death
3. Pay IHT

P.S Hopefully you don't own any US ETF's as inheritance tax will be due on US ETF's to US also if value exceeds $60k as I mentioned below :(.

https://www.offshorecorptalk.com/threads/nevis-llc-and-general-llc-questions.24177/post-81175
https://www.irs.gov/individuals/int...s-with-us-assets-must-file-estate-tax-returns
 
#12
Martin Everson said:
Ownership of any business Dubai or other is included in your IHT. You will get no IHT business relief also if Dubai company just owns the property and stock investments.



1. Cry
2. Transfer 7 years before death
3. Pay IHT

P.S Hopefully you don't own any US ETF's as inheritance tax will be due on US ETF's to US also if value exceeds $60k as I mentioned below :(.

https://www.offshorecorptalk.com/threads/nevis-llc-and-general-llc-questions.24177/post-81175
https://www.irs.gov/individuals/int...s-with-us-assets-must-file-estate-tax-returns
Click to expand...
Yes, I know officially it's under the IHT, but it's not that much money, maybe it's possible to just not declare it. I doubt those politicians and celebrities don't keep hidden offshore accounts (look at david cameron/ jimmy carr)
 
#16
#18
JustAnotherNomad said:
Doesn't apply (or only to a much, much smaller degree) if you're tax resident in one of these countries:
Click to expand...

Where does it not apply in UK so I can understand?

Under the UK-US Estate and Gift Tax Treaty You can get double taxation relief in UK. i.e if you pay UK IHT on your US situs assets then you don't pay it again in US which is fair agreement.

Have you read the UK-US Estate & Gift Tax Treaty?

https://www.taxtopics.net/United Kingdom.htm
P.S I am not giving US tax advice and have no interest in US tax matters. Always consult an expert. Take note of my signature.
 
#19
I haven't read the treaty, but those treaties usually award you a certain percentage of the tax free exemption, according to how much of your estate is located in the US vs. elsewhere. If 50% of your wealth is located in the US, you'd get 50% of the exemption.
Also:

Individuals domiciled in the U.K. have significant advantages over residents of other countries due to the favorable provisions contained in the estate tax treaty between the U.S. and the U.K., which has been in effect since November 11, 1979. Article 8, Paragraph 5 of the treaty provides that the estate tax imposed in the U.S. on a domiciliary of the U.K. shall be limited to the estate tax that would have been imposed if the decedent had been domiciled in the U.S. immediately before his death. For decedents dying in 2021, this means that if the worldwide estate of the U.K. resident was valued at $11,700,000 or less at date of death, the U.S. estate tax would be zero, regardless of the value of the U.S. assets in relation to the value of the assets outside of the U.S. Even if no tax is due, the filing of a U.S. estate tax return is required if the value of the U.S. assets exceed $60,000 at date of death.
Click to expand...
Source:
https://www.kbgrp.com/international...-tax-and-residents-of-the-united-kingdom.html
So no, it's definitely not like you pay 40% on everything above $60k and then get tax relief in the UK. That's what I would expect if there wasn't a treaty, as most countries have such a tax relief in their tax code, even if there is no tax treaty.
 
#20
So like I said and I will say it once again. US estate tax applies to UK residents for US assets. There is no if's or but's about it.
 
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