UK Inheritance Tax

A guide for British Expats in Singapore - Signpost

UK Inheritance Tax

UK Inheritance Tax: A Guide for British Expats in Singapore

As a British expat living in Singapore, it is important to understand the tax implications of your assets. If you want to protect your legacy and keep more of what is rightfully yours, you need to minimise your UK Inheritance Tax liability. UK Inheritance Tax can be an incredibly complex and confusing subject. But, with good financial planning and guidance from financial experts, you won’t fall into the usual traps.

UK Inheritance Tax in Singapore

UK Inheritance Tax, also known as the “death tax,” is a tax imposed on an individual’s estate when they die. It is currently set at 40% of the value of the estate above the existing threshold of £325,000, but for spouses and civil partners, there is a nil limit of £1 million, assuming that you leave your main home to your children or grandchildren. While Singapore does not have an inheritance tax within its tax regime, assets held by UK expats in the country may still be subject to UK Inheritance Tax, leading to a higher overall tax liability on your worldwide assets. This includes property, investments, and other assets located in the UK as well as those located in the country where they are residing.

The Singaporean Government has different policies and laws regarding inheritance and estate planning. In fact, they even have a separate legal system governing them. So, you should ensure that your wills and other estate planning documents comply with both Singapore and UK laws to avoid any confusion or disputes. This can be a complex process and it is highly recommended to seek professional legal advice to ensure your will is compliant with both countries’ laws.

One more thing to consider is Singapore’s central provident fund (CPF) system. It is a mandatory savings plan for Singapore citizens and permanent residents to save for their retirement, healthcare, and housing needs. If you qualify, you will need to take into account the implications of CPF for your estate planning.

Common Traps Involved in the UK Inheritance Tax

No matter how confusing UK Inheritance Tax is, you still have to prepare yourself. Simply knowing the common traps can make all the difference in effectively safeguarding your assets.

One trap that British expats should be aware of is the possibility of double taxation. There are countries that also have an inheritance tax and when you’re residing in one of those, you should seek professional advice. A financial expert can help you ensure that the tax liability is minimised.

Another trap is unexpected tax bills and penalties. If you move abroad, it is likely that your focus will be elsewhere such as on a new home, schooling, new jobs etc rather than the UK inheritance. But not being aware of tax updates may be to your detriment, especially on your UK-based assets. Remember, if you have assets in the UK, you are still subject to the UK Inheritance Tax laws, so it’s best to be informed about the changes in legislation.

You should also take note that if you leave your will in the UK, it will be distributed according to UK laws despite living abroad. This can lead to confusion and disputes if the will is not in line with the laws of the country where you are residing.

The Importance of Financial Planning When Abroad

Financial planning can play a crucial role in helping British expats make the most out of their finances, both in their home country and out. Working with a financial expert can be an extremely valuable tool in navigating UK Inheritance Tax. And, of course, avoiding the traps associated with it. They can provide valuable guidance on structuring your assets, creating a tax-efficient investment plan, and helping you review and update your will and estate plan regularly to ensure compliance with both Singapore and UK laws. Financial experts can also help you to create a comprehensive financial plan that takes into account your current and future financial goals.

In Singapore, financial advisers can help you to understand the implications of CPF on your estate planning and asset distribution. And most importantly, they can help you identify potential traps, such as double taxation and the possibility of unexpected tax bills, and take steps to minimise your tax liability.


Final Word

It is important to note that UK Inheritance Tax laws are subject to change. Therefore, it is important to review your will and estate plan regularly. UK Inheritance Tax may be taxing, but as long as you’re informed of the latest changes in the law and the common liability traps, you shouldn’t find yourself caught out in the future.

Eight Wealth International experts can help you get your UK taxes aligned with your financial goals in Singapore. We’re happy to help, so you can stress less in the most stressful moments. Click here to get in contact.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances. You are advised to seek independent tax advice from suitably qualified professionals before making any decision as to the tax implications of any investment.