France is one of the few countries to have a specific double tax treaty with the UK for inheritance taxes. The first step of estate planning for UK nationals in France is to understand how this treaty affects you and your heirs and whether you’ll be liable for UK inheritance tax, French succession tax, or both.
One topic that causes concern and confusion for British expatriates living in France is inheritance tax, particularly since most still have family in the UK. We’re getting more enquiries about this than ever with the UK tax reforms and inheritance bills there on a sharp upwards path.
The two UK inheritance tax nil rate bands are frozen until at least 2030. The main nil rate band has been held at £325,000 since 2009 – it would be around £500,000 if had risen in line with inflation. The Office for Budget Responsibility forecasts that HM Revenue & Customs will earn £14 billion a year from this tax by 2030, double the amount collected in 2022/23. Once pensions form part of your taxable estate from 2027, many more families will pay more tax.
But does this affect you as a UK national living in France long-term, especially since France imposes its own succession tax? Are you liable for UK inheritance tax, or French succession tax, or both? Since France and the UK have a double tax treaty for inheritances, the simple answer is that, as a habitual resident of France, your estate is taxable in France – but of course nothing is ever simple with taxation. There are many different circumstances you need to be aware of, and UK inheritance tax may continue to affect you more than realise.
Cross-border estate planning and taxation can be a minefield; make sure you get it right if you want your assets to be distributed according to your wishes and your heirs to be as protected as possible from inheritance taxes. Contact Blevins Franks for personalised advice for your family circumstances.
UK domicile regime replaced by long-term residence
Domicile was a particularly complex concept, and a hard tie to break, which determined liability to UK inheritance tax (IHT) for British expatriates in most countries until 5 April 2025. In countries like Spain, for example, they are subject to both IHT and Spanish succession tax.
It is different in France, thanks to a specific tax treaty with the UK on inheritances to avoid double taxation. Under this treaty UK nationals who are long-term residents of France are only subject to French succession tax on worldwide assets – except those in the UK. Assets located in the UK are always subject to UK IHT and in this case French residents are assessed for tax in both countries
The domicile regime was replaced by one based on long-term residence (generally 10 years of being resident or non-resident in the UK) from 6 April 2026, but the terms of this France/UK double tax treaty still apply. Here we look at various scenarios –
French residents leaving or gifting worldwide assets
If you live in France permanently, any assets you gift during your lifetime or pass on death are subject to French succession tax, subject to any tax treaty. British expatriates are not liable for UK inheritance tax on assets outside the UK (lifetime gifts may still have UK inheritance tax implications).
French residents leaving UK assets
In this case tax is due in both countries. However, credit is given in France for any tax paid in the UK. You do not pay tax twice – but do pay whichever is the higher amount. From April 2027, this will include your UK pension funds. This 40% IHT rate will be in addition to the standard income tax your beneficiaries face on the residual funds (up to 45%) if you die after age 75.
French residents receiving an inheritance or gift (general rule)
If you have lived in France for at least six out of the last ten years, you generally pay French succession tax on inheritances or gifts you receive (subject to tax treaty terms). This applies even if the donor and assets are outside France. There are severe penalties for failing to declare such inheritances/gifts.
French residents receiving an inheritance from the UK
Thanks to the UK/France tax treaty, the general rule above does not apply. You do not need to pay any French succession tax, provided the deceased was a long-term UK resident and there are no French assets. The estate will have been subject to UK tax.
French residents receiving a gift from the UK
The France/UK treaty only applies to inheritances. If you receive a gift from a UK domicile, you have to pay tax in France if you have been resident here for six of the last ten years.
UK residents owning assets in France
As a UK resident, assets you own in France are liable to French succession tax as well as forming part of your estate for UK inheritance tax purposes if you are a long-term UK resident. Your heirs are entitled to a credit for tax paid in France.
Key differences between UK and France inheritance taxes
In the UK, tax is calculated on your estate as a whole and paid by the estate. Spouses are generally exempt, but otherwise the fixed 40% tax rate and £325,000 threshold apply to everyone. The additional £175,000 residence nil rate band benefits many families, but there are limitations. It only applies to residential property you have lived in (which can be in France), and only when received directly by descendants. The relief tapers away for estates worth over £2 million so estates over £2.35 million do not receive any residential nil rate band at all.
In France, spouses/civil (“PACS”) partners also receive inheritances tax free, but do pay tax on gifts. Tax is calculated on, and paid by, each beneficiary. Every person you leave assets to has to personally pay the tax due. The rates and allowances vary according to beneficiary, with immediate family being much better off than distant or non-relatives.
For example, children pay tax at progressive rates starting from 5% to 45%, and each receives a €100,000 allowance. On the other hand, non-relatives pay a fixed 60%, with only €1,594 being tax free.
“Non-relatives” includes unmarried partners (unless you have entered into a PACS) and stepchildren. If you have adult children from a previous relationship you may not think of them as your spouse’s stepchildren. But if you leave assets to your spouse, who then passes them to your children when he/she dies, they will be taxed as non-relatives. Your children will therefore pay tax at 60% and lose the €100,000 allowance. Research all your options to see how you can protect both your spouse and children.
For British expatriates, estate planning may be the most complicated part of living in France. There are so many possibilities to get it wrong, resulting in unwelcome surprises for your family. But there are also planning opportunities to achieve your wishes and lower taxation for your heirs. A little time and effort, with specialist, professional advice, will prove extremely beneficial and provide peace of mind.
Blevins Franks has decades of experience advising UK nationals in France on effective estate planning solutions. We help ensure a smooth and tax-efficient transfer of wealth to your chosen beneficiaries. Our recommendations are highly personalised for your family situation and wishes.
Contact us today.
