AIG Life, a UK-based arm of the New York-based insurance giant American International Group, has unveiled a term assurance and whole of life product it says is aimed at UK resident non-doms who have been hit by recent inheritance tax changes.
The product is designed to help those non-UK domiciled individuals who have held UK residential property in an offshore structure, such as a trust or company, who will have been impacted by a change to the inheritance tax (IHT) rules which took effect last Thursday, the first day of the new tax year, according to reports.
The product is available as both a term assurance and whole of life proposition for non-UK domiciled individuals impacted by the new IHT on Enveloped Dwellings (IHTED) legislation.
Until Thursday, individuals who were neither UK-domiciled nor deemed domiciled for inheritance tax purposes were able to avoid IHT by this method of ownership, known as “enveloping”. Since 2013 there had been an annual tax to pay on such properties, known as the annual tax on enveloped dwellings, or ATED, but this was still less harsh than IHT.
As a result, a non-dom with a UK property worth £5m could now face a tax bill of as much as £2m.
Andy Roberts, technical sales manager at AIG Life, described the proposition as a “game changer” as previously there were limited options available for non-UK domiciled individuals and said that AIG Life was communicating the changes via high net worth advisers and private banks.
Many non-doms will also be non-UK resident but AIG Life is now able to consider cover for non-residents – both British citizens (expats) resident almost anywhere in the world (excluding the US and particularly risky territories) – and foreign nationals resident in over 40 countries.