Thousands of British expatriates living overseas could be set for a reduction in their inheritance tax (IHT) bills as part of the UK government's move to get rid of the non-dom tax status.
It means foreign assets in the estates of British expats may no longer attract IHT. At the moment, people who are UK domiciled, but live abroad, are charged IHT on their estates globally.
In his budget on Wednesday, Chancellor Jeremy Hunt said the Treasury "will get rid of the outdated concept of domicile and the remittance basis in the tax system, and replace it with a modern, simpler and fairer residency-based system".
The effect of switching to a residency-based system should mean that British expats who are living in places such as the UAE, but remain domiciled in the UK for tax purposes, could avoid incurring IHT on the parts of their estates that are held overseas.
But nothing is set in stone regarding exactly how this residency-based system will affect the IHT liabilities of UK-domiciled individuals living overseas, as the Treasury said it "will consult on the best way to move IHT to a residence-based regime".
"Decisions have not yet been taken on the detailed operation of the new system, and we intend to consult on this in due course," the Treasury added.
However, the suggestion in the government's papers associated with this week's budget hint at expats who have lived overseas for 10 years or more being liable for IHT only on assets in the UK, not on their foreign-held assets.
"It seems the concept of domicile will be largely irrelevant in the future for UK tax purposes," Chris Etherington, a partner at RSM UK Tax, told The National.
"For someone living overseas, an exposure to inheritance tax will be determined by their tax residence instead. It may become much more important for individuals to monitor and maintain the non-UK tax residence status" he added.
The foreign-owned assets might attract IHT in the countries where they are held, but many countries have lighter or no IHT regimes, for example Australia, Estonia and Norway.
However, the UK government has said that related changes to IHT will not happen until 2025 at the earliest.
A retirement in the sun
Any changes could also have the potential to make overseas retirement much more attractive to those coming to the end of their working lives in the UK.
"We could see a raft of retirees looking for the ‘world’s worst travel brochure’, highlighting countries that do not typically charge inheritance tax," Mr Etherington told The National.
"Places like Australia and New Zealand may prove to be attractive destinations for a retirement abroad as a result."
John McCaffrey, head of tax at Alexander & Co, agrees that UK retirees could become even more tempted to retire overseas, taking their spending power with them.
"Actually, liquidating your assets [in the UK] and moving overseas could be seriously beneficial," he told The National.
"Which surprises me, because this would be a great way of taking assets out of the UK and why would he [Jeremy Hunt] do something like that?"
But there could also be a significant time period of transition, according to Anthony Whatling, managing director at Alvarez & Marsal Tax.
"It's worth noting that retiring abroad could lead to a period where an individual might be subject to IHT (or its local equivalent) in both the UK and the new jurisdiction for the first 10 years," he told The National.
"However, double tax treaties should ideally prevent double taxation."
The website International Travel produces an annual Global Retirement Index, which lists the top places in the world to retire to, according to a survey it conducts of retirees living overseas.
Countries are ranked using seven criteria, from housing to ease of acquiring visas, and cost of living to health care – and, of course, climate. The ratings are then averaged out to give a final score.
In this year's index, Costa Rica takes top spot, followed closely by Portugal. Half of the top 10 are in Latin America, while four are in Europe.
'Clearer for all'
The boon to British expats could be considerable, if foreign assets are excluded from UK IHT calculations.
An estate's first £325,000 is exempt from IHT and above that a 40 per cent rate is applied, which is one of the highest in the world.
As a simple example, if your estate is worth £1 million, IHT would be 40 per cent of £625,000, or £250,000.
But if the new residency-based regime is applied in the way many think it will be and £200,000 of your estate is foreign-based assets, then your IHT bill becomes significantly reduced, because your UK estate is worth £800,000. Therefore, your UK IHT liability becomes £190,000.
However, this very basic illustration, and given the complexity of the UK tax system, by no means illustrates what may come to pass after the Treasury's period of consultation.
Also, there is no IHT payable on estates over £325,000, provided everything is left to a spouse, civil partner, charity or community amateur sports club.
In addition, if you give away your home to your children (including adopted, foster or stepchildren) or grandchildren, the IHT threshold can rise to £500,000.
Mr Whatling points out that the Treasury's consultation paper will detail the "system's operation, mentioning that 'other connecting factors' may also be considered".
"We need to await the consultation paper to understand the full implications, but it's possible that merely being non-resident may not suffice to escape the IHT net," he told The National.
"Connections to the UK, such as property, family, or other links, may still bring expats within the scope of IHT. Nonetheless, the new system promises to be clearer for all."
In response to a request for comment from The National, an HMRC representative said: “Some points of detail regarding inheritance tax will be settled after consultation with representative bodies and other interested parties.
"Further updates and draft legislation will then be published later this year, inviting technical comments.”
Another big uncertainty in all this is a potential change in UK government if the opposition Labour party were to be victorious in a general election later this year.
"The devil will most definitely be in the detail of any actual legislation," Mr McCaffrey told The National.
"What the final form looks like may not be what the Conservatives had in mind to begin with."
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
Company%20Profile
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
More from Rashmee Roshan Lall
Results
2pm: Serve U – Maiden (TB) Dh60,000 (Dirt) 1,400m; Winner: Violent Justice, Pat Dobbs (jockey), Doug Watson (trainer)
2.30pm: Al Shafar Investment – Conditions (TB) Dh100,000 (D) 1,400m; Winner: Desert Wisdom, Bernardo Pinheiro, Ahmed Al Shemaili
3pm: Commercial Bank of Dubai – Handicap (TB) Dh68,000 (D) 1,200m; Winner: Fawaareq, Sam Hitchcott, Doug Watson
3.30pm: Shadwell – Rated Conditions (TB) Dh100,000 (D) 1,600m; Winner: Down On Da Bayou, Xavier Ziani, Salem bin Ghadayer
4pm: Dubai Real Estate Centre – Maiden (TB) Dh60,000 (D) 1,600m; Winner: Rakeez, Patrick Cosgrave, Bhupat Seemar
4.30pm: Al Redha Insurance Brokers – Handicap (TB) Dh78,000 (D) 1,800m; Winner: Capla Crusader, Bernardo Pinheiro, Rashed Bouresly
Sunday's games
All times UAE:
Tottenham Hotspur v Crystal Palace, 4pm
Manchester City v Arsenal, 6.15pm
Everton v Watford, 8.30pm
Chelsea v Manchester United, 8.30pm
HAJJAN
%3Cp%3EDirector%3A%20Abu%20Bakr%20Shawky%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cbr%3EStarring%3A%20Omar%20Alatawi%2C%20Tulin%20Essam%2C%20Ibrahim%20Al-Hasawi%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cbr%3ERating%3A%204%2F5%3C%2Fp%3E%0A
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Turning%20waste%20into%20fuel
%3Cp%3EAverage%20amount%20of%20biofuel%20produced%20at%20DIC%20factory%20every%20month%3A%20%3Cstrong%3EApproximately%20106%2C000%20litres%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cp%3EAmount%20of%20biofuel%20produced%20from%201%20litre%20of%20used%20cooking%20oil%3A%20%3Cstrong%3E920ml%20(92%25)%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cp%3ETime%20required%20for%20one%20full%20cycle%20of%20production%20from%20used%20cooking%20oil%20to%20biofuel%3A%20%3Cstrong%3EOne%20day%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cp%3EEnergy%20requirements%20for%20one%20cycle%20of%20production%20from%201%2C000%20litres%20of%20used%20cooking%20oil%3A%3Cbr%3E%3Cstrong%3E%E2%96%AA%20Electricity%20-%201.1904%20units%3Cbr%3E%E2%96%AA%20Water-%2031%20litres%3Cbr%3E%E2%96%AA%20Diesel%20%E2%80%93%2026.275%20litres%3C%2Fstrong%3E%3C%2Fp%3E%0A
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Ukraine%20exports
%3Cp%3EPresident%20Volodymyr%20Zelenskyy%20has%20overseen%20grain%20being%20loaded%20for%20export%20onto%20a%20Turkish%20ship%20following%20a%20deal%20with%20Russia%20brokered%20by%20the%20UN%20and%20Turkey.%3Cbr%3E%22The%20first%20vessel%2C%20the%20first%20ship%20is%20being%20loaded%20since%20the%20beginning%20of%20the%20war.%20This%20is%20a%20Turkish%20vessel%2C%22%20Zelensky%20said%2C%20adding%20exports%20could%20start%20in%20%22the%20coming%20days%22%20under%20the%20plan%20aimed%20at%20getting%20millions%20of%20tonnes%20of%20Ukrainian%20grain%20stranded%20by%20Russia's%20naval%20blockade%20to%20world%20markets.%3Cbr%3E%22Our%20side%20is%20fully%20prepared%2C%22%20he%20said.%20%22We%20sent%20all%20the%20signals%20to%20our%20partners%20--%20the%20UN%20and%20Turkey%2C%20and%20our%20military%20guarantees%20the%20security%20situation.%22%3C%2Fp%3E%0A
Blackpink World Tour [Born Pink] In Cinemas
Starring: Rose, Jisoo, Jennie, Lisa
Directors: Min Geun, Oh Yoon-Dong
Rating: 3/5
The%20Mother%20
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Niki%20Caro%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Jennifer%20Lopez%2C%20Joseph%20Fiennes%2C%20Gael%20Garcia%20Bernal%2C%20Omari%20Hardwick%20and%20Lucy%20Paez%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203%2F5%3C%2Fp%3E%0A
How to join and use Abu Dhabi’s public libraries
• There are six libraries in Abu Dhabi emirate run by the Department of Culture and Tourism, including one in Al Ain and Al Dhafra.
• Libraries are free to visit and visitors can consult books, use online resources and study there. Most are open from 8am to 8pm on weekdays, closed on Fridays and have variable hours on Saturdays, except for Qasr Al Watan which is open from 10am to 8pm every day.
• In order to borrow books, visitors must join the service by providing a passport photograph, Emirates ID and a refundable deposit of Dh400. Members can borrow five books for three weeks, all of which are renewable up to two times online.
• If users do not wish to pay the fee, they can still use the library’s electronic resources for free by simply registering on the website. Once registered, a username and password is provided, allowing remote access.
• For more information visit the library network's website.
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
UAE currency: the story behind the money in your pockets
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
Result
Tottenhan Hotspur 2 Roma 3
Tottenham: Winks 87', Janssen 90 1'
Roma 3
D Perotti 13' (pen), C Under 70', M Tumminello 90 2"
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
SHADOWS%20AND%20LIGHT%3A%20THE%20EXTRAORDINARY%20LIFE%20OF%20JAMES%20MCBEY
%3Cp%3EAuthor%3A%20Alasdair%20Soussi%3C%2Fp%3E%0A%3Cp%3EPages%3A%20300%3C%2Fp%3E%0A%3Cp%3EPublisher%3A%20Scotland%20Street%20Press%3C%2Fp%3E%0A%3Cp%3EAvailable%3A%20December%201%3C%2Fp%3E%0A
COMPANY%20PROFILE
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THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Profile of Hala Insurance
Date Started: September 2018
Founders: Walid and Karim Dib
Based: Abu Dhabi
Employees: Nine
Amount raised: $1.2 million
Funders: Oman Technology Fund, AB Accelerator, 500 Startups, private backers
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
The specs: 2018 Dodge Durango SRT
Price, base / as tested: Dh259,000
Engine: 6.4-litre V8
Power: 475hp @ 6,000rpm
Torque: 640Nm @ 4,300rpm
Transmission: Eight-speed automatic
Fuel consumption, combined: 7.7L / 100km
Uefa Nations League: How it Works
The Uefa Nations League, introduced last year, has reached its final stage, to be played over five days in northern Portugal. The format of its closing tournament is compact, spread over two semi-finals, with the first, Portugal versus Switzerland in Porto on Wednesday evening, and the second, England against the Netherlands, in Guimaraes, on Thursday.
The winners of each semi will then meet at Porto’s Dragao stadium on Sunday, with the losing semi-finalists contesting a third-place play-off in Guimaraes earlier that day.
Qualifying for the final stage was via League A of the inaugural Nations League, in which the top 12 European countries according to Uefa's co-efficient seeding system were divided into four groups, the teams playing each other twice between September and November. Portugal, who finished above Italy and Poland, successfully bid to host the finals.
MATCH INFO
World Cup 2022 qualifier
UAE v Indonesia, Thursday, 8pm
Venue: Al Maktoum Stadium, Dubai
Profile of MoneyFellows
Founder: Ahmed Wadi
Launched: 2016
Employees: 76
Financing stage: Series A ($4 million)
Investors: Partech, Sawari Ventures, 500 Startups, Dubai Angel Investors, Phoenician Fund
COMPANY%20PROFILE
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Asia%20Cup%202022
%3Cp%3E%3Cstrong%3EWhat%3C%2Fstrong%3E%3Cbr%3EAsia%20Cup%20final%3A%20Sri%20Lanka%20v%20Pakistan%3Cbr%3E%3Cbr%3E%3Cstrong%3EWhen%20%3C%2Fstrong%3E%3Cbr%3ESunday%2C%20September%2011%2C%20from%206pm%3Cbr%3E%3Cbr%3E%3Cstrong%3EWhere%3C%2Fstrong%3E%3Cbr%3EDubai%20International%20Stadium%3Cbr%3E%3Cbr%3E%3Cstrong%3EHow%20to%20watch%3C%2Fstrong%3E%3Cbr%3ECatch%20the%20live%20action%20on%20Starzplay%20across%20Mena%20region.%26nbsp%3B%3C%2Fp%3E%0A
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
