I have a client who is UK domiciled, but was resident in France and later Spain until earlier this year when he returned to England. Whilst he was not a resident in England he gifted his French property to daughter. He has a property in Spain that he intends to gift to his son (originally during his lifetime, but he is unwell and now just plans to leave the property to him on death).
Will the gift of the French property (and possibly the Spanish one if they do go ahead) be treated as a failed PET for IHT purposes in England, despite him being a non-resident at the date of the gift?
For UK inheritance tax purposes, it is domicile (and deemed domicile) that is relevant, not residence.
If the client was domiciled within the UK, as stated, then the gifts would be PETs for IHT purposes
Consideration will need to be given as to whether gifts in France and Spain (i) are subject to tax whether or not the donor or donee are resident in that country, and (ii) if they are subject to tax, if there is any provision that will allow any such tax liability to be set off against the potential IHT liability on the failed PET(s).
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals