The UK IHT doesn't tax your foreign assets, so putting them in an offshore trust is a move you don't need to make
Following on from my blog ‘Matters of Trusts in the Czech Republic‘, a day later a client of mine was approached with a cunning inheritance tax plan involving trusts. Let’s clear this up simply — because somewhere along the line, common sense seems to have packed its bags and left the country. If you’re a Brit who has been living abroad long-term and is no longer UK-domiciled (or is treated as such), the UK Inheritance Tax (IHT) system becomes surprisingly limited.
Only your UK-situs assets are exposed to UK IHT. We’re talking about:
- UK property
- UK-based investments
- Certain UK holdings
- Pensions from 2027
Your Non-UK Assets are generally outside the UK IHT net.
That includes:
- Cash sitting in a non-UK bank account
- EU investments/property etc
From upcoming changes, UK pensions may become subject to IHT. But here’s the crucial point people keep missing, even if UK pensions are brought into IHT, that does NOT suddenly make your non-UK assets taxable.
The UK still only taxes what it has jurisdiction over — UK-situs assets
From upcoming changes, UK pensions may become subject to IHT. But here’s the crucial point people keep missing, even if UK pensions are brought into IHT, that does NOT suddenly make your non-UK assets taxable.
The UK still only taxes what it has jurisdiction over — UK-situs assets.
Now enter the “brilliant” idea
“Move your non-UK cash into a trust in the Isle of Man to save IHT.”
Let’s translate that. Take money that is already outside UK IHT, pay a lot of fees to move it, put it into a structure…so that it remains outside UK IHT.
This is not tax planning. This is financial performance art. It’s like buying fire insurance for a lake.
What do you actually get from this?
Setup fees, annual trustee fees, less control over your own money, more paperwork and potential trust reporting headaches. Also, lack of regulatory protection for unregulated advice and investment products. All to protect something that wasn’t exposed in the first place.
And now, the part that should really raise eyebrows. This kind of advice is often coming from individuals who:
- Are not regulated to advise EU residents
- Have little to no understanding of local rules (for example, how Czech trust reporting actually works)
- Are selling unregulated insurance-based products into jurisdictions where that is, at best, questionable
That’s not “planning.” That’s a red flag with a sales commission attached.
Here’s the reality
If you are genuinely non-UK domiciled or long-term non-resident:
- The UK taxes your UK assets
- It may soon include UK pensions
- It does NOT tax your EU bank accounts
So moving non-UK cash into a trust “to avoid UK IHT” is like wearing a crash helmet while sitting on your sofa — expensive, uncomfortable, and solving absolutely nothing.
Final thought
Many Brits still have investments in the UK that could be caught in the IHT net in the future. We can assist with actual IHT planning where perhaps extracting funds (with tax advice) and investing the funds locally could end up saving a lot of IHT, without the associated red flags of unregulated products, poor advice and high commissions for the salesperson. Always check the Czech National Bank register to make sure the person advising you about your money is actually allowed to do so.
Good planning reduces real risks. Bad planning creates imaginary ones… and then charges you to fix them.
Specific, Legal, and Correct UK / Czech Advice
The regulations affecting British pensions, taxes, and inheritance are a moving target. You need strategic, yet sensible advice for your UK and CZ holdings.
