The UK's tax system is a worldwide based system and thus whether income arises in the UK or elsewhere, and whether assets are located within the UK or elsewhere, is immaterial; all is brought within the charge to UK tax. This is true whether the tax is Income Tax, Capital Gains Tax or Inheritance Tax (IHT).

However, overseas located property does not fall subject to IHT where such property is owned by non-UK domiciled individuals; such property is referred to as excluded property. The UK's common law rules determine whether property is UK or non-UK located for IHT purposes.

Issues of relevance where an individual dies owning overseas located property (or gifts such property in lifetime) include:

• double taxation;
• liabilities other expenses;
• sterling;
• forced-heirship; and
• structure.

Double Taxation

Many UK domiciled individuals possess property outside the UK which, as a consequence, may precipitate an equivalent charge to local IHT in the country in which the property is situated; in the absence of some form of relief double tax arises.