As the remittance basis user would have died prior to the remittance being made, there is a question as to who would have to pay any tax, especially if the sum assured was remitted in the tax year following the death.
Looking at HMRC’s Residence, Domicile and Remittance Basis Manual, section RDRM33600 states that ‘Foreign Income and Foreign Chargeable Gains of a remittance basis user that arose or accrued before his or her death but which are brought to the UK after the date of his or her death will generally not be regarded as a taxable remittance.’
On this basis, the lump sum may not be taxed when being remitted anyway; it is important to clarify the tax position when considering any remittance to the UK.
The use of a suitable life assurance policy can be a simple solution to the IHT problem a non-UK domicile faces, which in the past, has been solved by some complex financial arrangements.
