Loan from wife and IHT

skillboy

My wife is Thai and has given me the Thai baht equivalent of £30,000 to invest in my Vanguard investment funds (which I do via the Vanguard UK website) as she cannot do so from Thailand.

Although she has "given" the cash to me so it can be invested what is the best way to deal with this from an UK IHT point of view for me?

I believe that upon my death any UK IHT is calculated on the value of my estate. The value of my estate is based on my assets minus my liabilities. Loans I have taken out would count as a liability and thus reduce the overall value of my estate.

Would it be better that my wife lends me the money i.e. we sign a loan contract between us saying that I have to repay this money with x% of annual interest and in a lump sum upon my passing?

Would doing so potentially reduce any UK IHT for me in the future?

Thoughts?

Apodemus

I’m afraid your post probably raises more questions than answers.

Is your estate likely to be over the IHT threshold? In which country are you resident? Is your estate passing to your wife? Is all your estate in UK?

skillboy

Apodemus wrote: »

I’m afraid your post probably raises more questions than answers.

Is your estate likely to be over the IHT threshold? In which country are you resident? Is your estate passing to your wife? Is all your estate in UK?

My estate is likely to be over the IHT threshold.

I live in Thailand most of the time and am a UK national.

Most of my estate will pass to my wife who is Thai and lives in Thailand.

All my estate is in the UK.

Hope this clarifies!

Keep_pedalling

Under UK IT law anything left to a spouse is IHT exempt, and from a quick Google it seems the same applies to Thai law, so it appears there is no need to make this a loan as far as IHT is concerned.

You really should take professional advice regards to which country ( or countries) you should have wills for. Although you are a UK citizen your main residence would seem to be Thailand and residency is important as far as which laws apply when you die.

getmore4less

Under UK IT law anything left to a spouse is IHT exempt,

This has come up recently you need to look at the domicile rules as the spouse exemption is effected by them.

https://forums.moneysavingexpert.com/discussion/6044591/iht-question

SeniorSam

If you make a Loan to your wife and it is properly documented, ideally through a lawyer, then on your death that loan would be repayable. However, it would be the loan only unless the loan agreement specified that interest of a certain sum of % was part of the loan. The gain to your wife would be for her to declare to her tax authority.

Keep_pedalling

getmore4less wrote: »

Under UK IT law anything left to a spouse is IHT exempt,

This has come up recently you need to look at the domicile rules as the spouse exemption is effected by them.

https://forums.moneysavingexpert.com/discussion/6044591/iht-question

Not only come up recently, but the same OP, so this will now be £100,000. Are there no platforms in Thailand the OPs wife can use to invest her own money rather than the rather dodgy money shuffling proposed.

skillboy

Keep_pedalling wrote: »

Not only come up recently, but the same OP, so this will now be £100,000. Are there no platforms in Thailand the OPs wife can use to invest her own money rather than the rather dodgy money shuffling proposed.

There are but the annual charges are higher, between 1-2% vs 0.22% for some Vanguard equity funds.. it's a good point though and one that I have considered and still will....