Inheritance tax on international ISA deposits

dilby

Hi all - I'm an Aussie expat living in the UK (dual citizenship) and have an ISA here. My parents have come into some money and wish to deposit some money into the isa regularly. When researching if someone can pay directly into someone elses ISA (depends on the platform) I came across a fair bit of into regarding rules over gifting money, and inheritance tax which was all news to me as there's no inheritance tax in Australia. I just was hoping to confirm what I've understood from what I've read as the more I read the more confused i got. Essentially they can give me what they want but if they both (not sure if it's just one or both) die within 7 years the amount the give can't have exceed £325k or else it will be taxed at 40%. Is that correct? 
I'm also not sure if any of this needs to be declared at how much communication goes on between the Australian Tax Office and the hmrc in regards to ISA's.

Thanks

eskbanker

UK inheritance tax (and the impact of gifts on its calculation) is only applicable to the estate of the deceased so wouldn't be an issue unless they reside in the UK for tax purposes.

dilby

eskbanker said:

UK inheritance tax (and the impact of gifts on its calculation) is only applicable to the estate of the deceased so wouldn't be an issue unless they reside in the UK for tax purposes.

Oh wow thanks, I thought it applied to me if I lived in the UK, not if the deceased lived in the UK. Thanks so much

Alexland

Also assuming you are 18+ then they would not be contributing into your ISA but probably gifting you the money via international bank transfer for you to then contribute into your ISA assuming you have UK residence for tax purposes. They may wish to consider whatever inheritance or gifting related tax issues apply to Australian residents.