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Cyprus Tax - Inheritance Tax

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Information on the subject of Cyprus and UK Inheritance Tax

Limassol Income Tax Office            Photo © CyprusExpat.co.uk

There is no Cyprus Inheritance Tax, this was abolished some time ago.

Many Cyprus Expats believe that just because they live in Cyprus, they are not eligible for UK Inheritance Tax. One of the hardest things to do with UK Tax, is to change your domicile. Just saying that you wish to be buried in Cyprus is not enough these days, when the UK Government is in desperate need of funds.

If you are domiciled in Cyprus, then only your UK assets will be eligible for UK Inheritance Tax. Domicility is a very complicated issue, and you should seek professional advice to see if you are actually domiciled in the eyes of the UK HMRC.

If you are considered UK Tax domicilied, or are domiciled in Cyprus with UK assets, then UK Inheritance Tax will apply, as from 06 April 2009 this stood for the amount above GBP325,000 per person. You may also transfer this to your spouse upon death.

Listed below are some useful tips to legally avoid UK Inheritance Tax:

1. Donate Gifts Regularly

You can reduce your UK Inheritance Tax liability by making regular gifts. Three golden rules apply:

You must pay out of income

You must donate regularly, or at least show an intention to do so

Your standard of living must not suffer

2. Equity Release

There are various schemes that allow you to collect the equity from your home and spend it before paying tax.

3. Service Personnel

If death has been caused by an illness or injury sustained on active service, the estate may be exempt from UK Inheritance Tax.

4. Make A Will

A Will helps you avoid some unecessary UK Inheritance Tax problems. It also ensures that your wishes as to who receives what from your estate are met.

5. Be Generous

By making gifts, and you live longer than seven years, those gifts that you made, will be exempt from UK Inheritance Tax.

6. Weddings

There are special arrangement for parents to give a substantial amount for their children on their wedding.

More information on UK Inheritance Tax may be found on the HMRC website

Last Updated 20 July 2016

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