Comparison website ‘misleading’ savers into buying low rates

Generally speaking, saving money and planning for your future are two key aspects of financial planning. So, getting this right as early as possible should be one of your main priorities, to ensure that there are no nasty surprises down the line. There are a multitude of reasons that you might choose to put money aside, such as for a “rainy day fund”, a house purchase, your children’s education or making sure that you can retire comfortably.

Whatever your objective is, you can save by either putting money aside each month, or, if you have already managed to save money in the bank, look to gain a better rate of interest for a greater return. This could be a particularly advantageous avenue when you consider that in fact, once you take inflation into account, most money on a bank deposit will effectively be losing its value each month.

Many UK expatriates do not realise that even if they have left and are no longer resident in the UK, they remain UK-domiciled and therefore subject to UK Inheritance Tax (IHT) on their worldwide estate at a rate of 40 per cent after allowances. This can come as a major shock. 

What can be done about this? There are several options. 

Transfers of wealth on death between husband and wife are exempt from IHT, but only if the spouse is also domiciled in the UK (or both are non-domiciled). This catches out many expatriates who have married a foreign passport holder who is likely to be domiciled elsewhere. Even then, the IHT is only delayed rather than avoided, because on the death of the survivor the tax will be payable on the passing of the family assets to the next generation.