£1m Overseas Property Owner: UK Inheritance Tax Exposure Solved

The Situation

An expatriate property investor had lived outside the UK for over a decade. During that time, he built and retained a UK residential property portfolio worth just over £1 million.

He was unmarried and had a single adult child. Like many long-term expats, he believed that living abroad meant his estate was no longer exposed to UK inheritance tax. No formal succession or estate planning had been put in place.

However, this assumption was incorrect — and potentially costly.

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The Risk

Despite being non-resident, the client still owned UK-situated property. That meant:

• The full UK inheritance tax regime still applied
• Up to 40% tax could be due on death
• His child could face a forced sale of property to fund the tax bill
• No liquidity existed to pay the liability

Without planning, the family would have faced a six-figure tax charge at the worst possible time.

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Our Review

We began with a full strategic review of:

• UK inheritance tax exposure
• Ownership of each property
• Whether corporate or personal structures were being used
• Gifting, trust and succession options
• Whether any protection existed to fund a future tax bill

We also assessed how UK tax rules interact with long-term overseas residence — a common area of misunderstanding.

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The Strategy

Rather than offering a single product or one-off fix, a layered solution was put in place.

1. IHT position clarified
The client was shown clearly and simply that UK property remains taxable regardless of where he lives. This immediately changed his understanding of the risk.

2. Ownership structure reviewed
We assessed whether the properties should remain personally held or be moved into a corporate or trust structure to support longer-term planning.

3. Lifetime planning explored
Options around gifting, trusts and estate planning were mapped — including what could and could not realistically be achieved at this stage.

4. Liquidity protection introduced
We arranged for inheritance tax protection via life insurance written into trust, ensuring any future tax bill could be paid without selling property.

5. Legal planning coordinated
A specialist private client solicitor was introduced so that wills, trusts and estate planning documents could be correctly aligned with the tax strategy.