The French usufruit as it stands for UK IHT purposes and the « non-dom » proposals

In the light of the policy statements made by the Chancellor, the long-standing issue for French and British alike is still whether the gift made of the nue-propriété of a French home whilst retaining the usufruit needs revisiting.

The gift of the nue-propriété is not a “settlement” by the giver under current IHT legislation, despite certain English lawyers’ attempts to redefine it as such. There is no trust, burden or charge created.

HMRC have conceded that in cases in which I have been involved, with no “determination” of an IHT liability on the whole propriété. In one case, a reimbursement of a credit for French succession duty was also obtained.

Whilst Excluded property for a UK “non-dom”, the gift of the nue-propriété is also a PET for a UK resident domiciliary, not a relevant property settlement.

It is crucial to obtain correct detailed advice on the correct treatment of a gift or legacy involving usufruits, and also to follow the proposals on the change from domicile to residence for IHT purposes as from 2015.  

Rodger Peter Harris has been advising as a Barrister in international law and tax since his call some 45 years ago. 

His reputation is founded on a solid base of successes in Trusts, usufruits and international law matters with HMRC and the French tax adminstration. 

He is recognised as an expert in cross border succession – and alternatives – in and outside the scope of the EU Succession Regulation (n° 650/2012). 

We can work on a two tier system: 

1. guidance of a non-advisory nature (for potential lay clients); (and then/or)
2. full regulated legal advice for lay clients and professionals.

Please contact us to find out how to instruct us. 

He also has competence in Jersey and Guernsey law and the Islands’ income tax legislation; 

He is a Fellow of the European Law Institute in Vienna. 

He is a qualified Mediator, a member of the Revenue Bar Association and a Member of Chancery Bar Association.

Peter Harris: Head of Overseas Chambers

[email protected]

GB direct line: +44 (0)1534 625879 

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