Incidence and burden ― overseas issues

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

Under UK law, the PRs are liable for the inheritance tax due on the chargeable transfer made on death. The tax is funded out of the estate assets under their control. The value of those assets, reduced by the tax payable, will be distributed to the beneficiaries according to the Will or the rules of intestacy. The PR will need to resolve the question of who ultimately bears the burden of the tax.

Burden of IHT

IHT on the estate of a deceased person - the general rule

Where a PR is liable to IHT on the estate of a deceased person, that IHT is treated as part of the general testamentary and administrative expenses of the estate (ie so that the burden of the tax falls on the residue of the estate) but only to the extent that:

•
the IHT is attributable to assets situated in the UK
•
those assets vest in the PR, and
•
those assets were not comprised in a settlement immediately before the death

IHTA

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