Avoiding unwanted tax liabilities when buying a home in the UK


Alongside identifying quality support on conveyancing, it is essential that international buyers seek legal advice on the tax implications of acquiring a home in the UK. Unexpected tax liabilities can surprise the unprepared, while well-advised buyers will have the best chance of limiting their exposure.

The main concern will be inheritance tax (IHT). Non-UK domiciled individuals are subject to IHT at a rate of 40% to the extent that the value of their UK estates exceeds the tax-free ‘nil rate band’ allowance (NRB).  At a modest £325,000 (or in some cases, £500,000), the limited scope of the NRB can come as a shock to those relocating from (say) the US, where the amount that can pass free of federal estate tax is currently $12.92m

Owing to significant changes in legislation over recent years, the options for mitigating IHT are limited. Good advice is needed to navigate the rules successfully and ensure that ownership arrangements are tax efficient. Planning might include securing the exemption that applies to transfers on death between spouses and civil partners, using debt to reduce tax exposure, specialist life insurance, and (in some circumstances) co-ownership of a property with children. 

In all cases, buyers should take advice before completing a purchase, as some forms of planning may not be effective if put in place later on.

Special attention is needed for those who will continue to be subject to tax in another jurisdiction. Double taxation agreements and cross-border reporting may add to the need for a pre-purchase check-up.  For those with a US connection, acquiring a property in the UK makes specialist advice on US-UK estate planning a must-have.

UK tax legislation, with all its complexity and intricacies, has a habit of leading the way in making the case for fact-specific legal counsel.  Pre-purchase tax advice should be at the top of the to-do list for those thinking of acquiring a home in the UK.

By Xavier Nicholas, partner and head of private client at Forsters LLP



Abode Affiliates

  • Alleyne Real Estate
  • Blevins Franks
  • Coldwell Banker
  • Crane Resorts
  • Monaco Real Estates
  • RDO
  • St Francis Links
  • Unique Home Stays
  • Yoo
  • Worldwide Dream Villas
  • Enigma Yachts Limited
  • Cornerstone Tax Advisors
  • Pedini London
  • Alexander James
  • Moore Stephen
  • Ibiza Transit Express
  • Oyster Yachts
  • Jumeirah
  • Wall Street Luxury
  • Heron Real Estate
  • Edenhurst
  • MG&AG
  • Gama Property
  • Touch Design Group
  • St Edward
  • Ultra Villa
  • Luxury Italian Living
  • Habitat First Group
  • BDO
  • 7Storeys
  • Worldwide Property
  • Dimora
  • Dominic McKenzie Architects
  • Harry Manning
  • Smart Living
  • Isle Blue
  • MAS Marbella
  • Millgate
  • Jersey Finance
  • guernsey-relocations-logo
  • viberts-logo
  • kpmg-logo
  • author-interiors
  • Wilkinson Beven
  • BoConcept
  • Ante Vrban
  • Deborah Garth
  • You home
  • Ra Shaw Designs
  • Caudwell Collection
  • accanto-interiors
  • Fritz Hansen
  • capital-rise
  • jarrods-staircase
  • neil-davies-logo
  • Tina Shone Group
  • Taplow riverside
  • Aimo
  • ns-ceramics-logo
  • Rusk
  • Consilium Expert Group
  • Ben Krupinski Builder
  • Swoffers
  • Guernsey Relocation Services
  • Douglas Graneto
  • Strutt & Parker
  • wilsons
  • MJC Associates
  • plainspace
  • Fine & Country
  • Bramble Ski
  • Penthouse queen
  • Sarco_Affiliate_Logo
  • taylor wimpey
  • cooper-gardner
  • M Design Architects
  • codan
  • Lovells
  • London DE
  • Prime Lands Group
  • Bellegarde Estates
  • Sinclair
  • Pippa Paton
  • Ecole d'Humanite
  • Benedek Lewin
  • Inspired Villages
  • Huelin Homes
  • Gaudin
  • Lovells Property
  • Racecourse Lodge Logo
  • Paseo
  • Lemay + Escobar
  • Octagon
  • Locate Isle of Man
  • Newlands of Stow
  • Hawksford
  • Holdun
  • Schule Schloss Salem
  • AR Architecture
  • lazaro
  • Sella Concept
  • Blakstad
  • miller interior
  • Wealth Club
  • Yellow House Architects
  • Designer Touches
  • Zafiro
  • Nicole Murray
  • Scout Boats
  • Emerson Insinkerator
  • Forsters
  • https://www.cullenhomes.co.uk
  • https://www.londonlight.works

Enter your dream destination