Take note!! – Inheritance tax is a complex area – so specialist advice is advised… and of course we can assist you with that. In the meantime, here is an overview
The good news is that there is no inheritance tax in the Isle of Man.
However, liability for Inheritance Tax (IHT) in the UK is not based on where you’re living for tax purposes- instead it’s based on where you think of as your permanent home, or your “domicile”. Therefore, if you move here – with the intention of staying permanently – your domicile will be the Isle of Man… so far so good.
However, it’s not quite as simple as it seems because UK tax law has some rather complex rules regarding changing domicile (deeming provisions). These rules mean that if you move from the UK to the Isle of Man, from a UK tax perspective, it’s probably not going to be an overnight switch from being UK-domiciled to Manx-domiciled. It can take some time and should also be carefully documented. This is why we recommend professional advice.
Also, even if you are Isle of Man domiciled when you die, certain categories of assets that you have in the UK, like land and buildings, can still be subject to UK IHT. The rate is usually 40% after considering the nil rate band and other deductions. So, no matter where you’re domiciled, UK assets can still come with a UK tax bill.
See our article Isle of Man Tax for New Residents for more information.