Hi,
I have a married couple. One born and brought up in NZ, but has gained an Irish passport. He has worked in the UK for 6 years. The other is US born and brought up and has been in the UK for 5 years, firstly on a working visa and now on an Appendix FM visa (1 year in). Neither can commit to which country they will eventually settle. Both work for the same company in the UK. The company is NZ based but listed on the Australian ASX.
Could you correct/advise on the following questions. I am writing Wills with Will Trusts.
I believe both clients are currently non-UK domiciled, using the above information (i’m aware of deemed domicile after 15 out of 20 tax years) is there any way that they could be classed as UK domiciled?
I believe that they are both entitled to spousal exemption and no IHT to be paid on first death (as with both UK domiciled)
Due to complications with regards to the client who is in the UK on a Visa the main residence is in the sole name of the spouse. With non-domiciles I believe the client with the sole ownership is entitled to NRB and RNRB and the other just NRB. In this situation would there be any transferable RNRB?
These clients have shares on foreign exchanges, most notably with the company they work for in the UK (NZ company on Australian ASX) These shares are worth around £0.5M so could be very impactive on IHT. As non-UK domiciles I believe their Wills/IHT would only cover UK based assets. Is there a situation whereby these shares on foreign exchanges could be drawn back to be classed as a UK asset in some manner?
I believe both clients are currently non-UK domiciled, using the above information (i’m aware of deemed domicile after 15 out of 20 tax years) is there any way that they could be classed as UK domiciled?
They could possibly have UK domiciles of origin if, for example, their parents were UK domiciled at their births.
I believe that they are both entitled to spousal exemption and no IHT to be paid on first death (as with both UK domiciled).
Assuming, as you suggest, they are both non-UK domiciled then each spouse is entitled to a spouse exemption on inter-spouse transfers.
Due to complications with regards to the client who is in the UK on a Visa the main residence is in the sole name of the spouse. With non-domiciles I believe the client with the sole ownership is entitled to NRB and RNRB and the other just NRB. In this situation would there be any transferable RNRB?
Assuming the spouse with legal title has 100% of the beneficial interest (ie the spouse with legal title has not executed a declaration of trust in this regard) then that spouse on death would in principle be entitled to a NRB and a RNRB. If on death the legal title owning spouse passed the residence to the other surviving spouse then on the death of the surviving spouse a NRB, RNRB and a TRNRB would be available.
These clients have shares on foreign exchanges, most notably with the company they work for in the UK (NZ company on Australian ASX) These shares are worth around £0.5M so could be very impactive on IHT. As non-UK domiciles I believe their Wills/IHT would only cover UK based assets. Is there a situation whereby these shares on foreign exchanges could be drawn back to be classed as a UK asset in some manner?
For IHT, shares are sited where they can be dealt with which in many cases is where the register of of members of the company is kept.
Thank you for your reply Malcolm, the majority of your replies are what I thought they would be, but nice to have the confirmation.
The last point about shares on foreign exchanges being drawn back to be classed as a UK asset.
Your answer to this is very helpful and confirms the following information that I have gathered. The shares of this company has it’s HQ in New Zealand, but are listed on the Australian ASX. However, the company has limited companies in UK, Australia and the US. As non-UK domiciles who own shares on foreign exchanges, you will not be liable to UK inheritance tax on those shares, as long as they are not situated in the UK. This is because foreign property held by non-UK domiciles is ‘excluded property’ for IHT purposes. However, there are a few exceptions to this rule. For example, if you own shares in a company that is incorporated in the UK, those shares would be subject to UK inheritance tax, even if they are listed on a foreign exchange.
I have included this detail as it may be helpful to others with a similar scenario.
“However, there are a few exceptions to this rule. For example, if you own shares in a company that is incorporated in the UK, those shares would be subject to UK inheritance tax, even if they are listed on a foreign exchange”.
The above is not really an exception. UK company law provides that the registered office address must be in the same country the company is registered; hence company incorporated/registered in England/Wales or Scotland must have a English/Welsh or Scottish located registered office.
For CGT, TCGA 1992 s275(1)(a) specifically provides:
“…(da) subject to paragraph (d) above, shares in or debentures of a company incorporated in any part of the United Kingdom are situated in the United Kingdom”.