Inheriting in the Sun
By David Hoppit
WORLD leaders are making noises about demonising tax havens, popular with bank robbers and dodgy dictators, but there’s less agreement between governments on the odious inheritance tax.
Plenty of idyllic destinations do not have it – including many Caribbean islands, Australia and New Zealand, Singapore and parts of Europe. Portugal, Gibraltar, Cyprus, Sweden and Switzerland are all good places for those wanting to beat the tax, while closer to home; the Channel Islands and the Isle of Man are also worth considering.
Unlike the US, where only the very wealthy are taxed at death, ordinary Britons – people who have worked and saved all their lives (and paid their taxes) – have 40 per cent of their estate above the £325,000 threshold grabbed by the Inland revenue at death. So almost anyone owning a detached house in the South-east is clobbered.
Last year, some six per cent of British estates (about 35,000) had to fork out nearly £4billion to the Government in inheritance tax (IHT). It is not surprising therefore that many families are looking to move overseas, to countries where the living is easy.
To change your domicile permanently, it is safest to remove all assets from the UK. Even keeping a second-home foothold is risking one’s entire estate being liable for the full tax. If you trust your children and live for seven years you could give them the money to buy a house to which one might return for ‘holidays’ – but care must be taken even then.
Those idyllic Caribbean islands are pretty tempting. Apart from having to batten down the hatches every decade or so when a hurricane brushes by, the lifestyle is most agreeable. Bequia is the largest of the islands in the glorious Grenadines, south of St Vincent.
Modest tourism and a small (30-acre) development called Adams Bay will go some way to solving the problems created by the loss of agricultural jobs.
The development is in Caribbean style and some of the houses are truly grand. Prices range between £430,000 and £1.65million. Buyers should allow in their budget for a further £6,000 to £35,000, depending on the purchase price, for fees, taxes and stamp duty but afterwards taxes are low and there is no inheritance tax.
St Lucia is another great place to live. There is no VAT on property, no capital gains tax and no inheritance tax. The Jalousie Plantation, between the famous twin peaks known as the Pitons, is having a $100million facelift and is due to reopen in 2010 as the Tides Sugar Beach. Properties there cost between $700,000 and $6million.
There are, however, cheaper options in the Caribbean area. Gary Hooper and his wife Pamela from Maldon in Essex have bought two properties through Prestigious Properties, one at Silver reef in St Kitts and another at Alexandra, in the Turks and Caicos Islands.
They cost about £145,000 and £250,000 respectively.
Mr Hooper, whose company designs and builds bespoke kitchens, bathrooms and home studios, said: “At this stage of our lives we saw them as the perfect solution for holidays and a potentially good investment.
“We are not ready to retire yet, but when the time comes we will look very seriously at moving to one of the islands.”
However, one doesn’t have to jet away to tropical islands to escape inheritance tax. There are, for example, the Channel Islands, all of which are inheritance tax-free, but there are problems. Property on Guernsey tends to be prohibitively expensive while Jersey accepts only a few incredibly rich new residents a year.
Three times larger than Jersey and 10 times the size of Guernsey is the Isle of Man. It is a beautiful place to live.
So, if you’ve worked hard all your life and saved a few bob – and live in a house worth more than about £325,000 – an island retirement might be well worth considering.
If you fear missing your chums, rest assured they will waste no time visiting you and they might even move next door…
INFORMATION:
St Lucia and other Caribbean property – Prestigious Properties 0208 812 4734