This is the question I get asked most frequently by expats. I guess the older we get the more important it is that we can pass that wealth on to those that we leave behind. Whether you have accumulated €250,000 or €2,500,000 during your lifetime the thought of the taxman taking a hefty proportion is not one that we want to consider. Yes our children may have more wealth than we might have, just like we have probably accumulated more than our parents ever did but in most cases we would rather the state doesn’t get its hands on our money.
Of course as an expat the situation is compounded because not only do we have to think of the issues surrounding Spanish succession tax but if we remain domiciled in the UK then there is a possibility that UK inheritance tax needs to be factored into the equation. Hardly a case of living a dream if your beneficiaries are going to suffer the consequences of death taxes in two countries particularly when you can do something about it.
In my experience it makes sense to plan and plan early, after all the one event we have no control over is when our time is up. I have seen too many cases of “if only he or she had done something about it”
What would you say if I told you that we could move your free assets into a bona fide pension scheme and immediately remove those assets from UK IHT? So if your assets for UK IHT liability are £2 million (and don’t forget that the whole issue with being UK domiciled is that your worldwide assets are included in the sum for IHT) and £1 million of those are investable we can immediately save £400,000 from tax. Yes that’s right £400,000 could be removed from tax immediately, even if you were to return to the UK at some stage in the future. Isn’t that worth thinking about?
Of course if you ask me to arrange this type of scheme for you when you are 85 I cannot do it, it is too late! HMRC will see it purely as an IHT avoidance scheme rather than a pension with additional tax benefits. We cannot jeopardise the benefits by falling foul of the rules. HMRC are worried enough about this loophole in any case and there is a clammer at each budget for this type of scheme to be closed.
There are also succession tax benefits, rather than your beneficiaries receiving a lump sum when you die which could of course be subject to succession tax if they are resident in Spain they can draw a tax efficient regular income from the remainder of your fund.
This is just one solution to replace the pain of death taxes. Let us start by offering you a FREE private consultation (worth £500) to assess your current financial position and explain how our Spanish tax reduction strategies can help. If you already have a clear understanding of your current situation we can offer a FREE tax planning assessment instead (worth £1,000). Just think you will be getting FREE advice on tax planning for Spanish residents as well as retirement, savings, death and wealth tax mitigation strategies.
Interested? Speak to one of our qualified expat advisers on tel 34 951319727 or email firstname.lastname@example.org.