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Inheritance Tax

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If you live abroad or have assets outside of the UK, it’s likely that your heirs, or even you, will be affected by the inheritance taxes of more than one country.

Most UK nationals living abroad remain liable for UK inheritance tax on their worldwide assets because they are still seen as a UK domicile, often without realising it.

To make sure your legacy goes to the right place without leaving your heirs a hefty tax bill, you’ll need to understand the rules in the UK and your country of residence and how they interact.

Taxes on Gifts

Many countries charge a tax on gifts given within your lifetime, although there may be some exemptions or time-based relief. In the UK, for example, if you survive for at least seven years from the date of a gift to an individual, it may fall out of account for tax purposes.

Different Types of Taxes on Death

France imposes a ‘succession tax’ on residents’ worldwide assets. The tax is paid at a progressive rate by each beneficiary. Rates vary according to their relationship to you and can be very high for ‘non-relatives’:

  • Spouses and civil partners are exempt from succession tax
  • Rates range from 5% to 45% for natural children
    Stepchildren and unmarried partners face the non-relatives rate of 60%

Spain charges succession and gift tax on Spanish assets or assets passing to Spanish residents. State rates range from 7.65% – 34% but surcharges could increase this to 82% for wealthy recipients not directly related to you. In addition, each ‘Autonomous Region’ applies different reliefs and exemptions, and often different rates of tax.

Portugal and Malta charge a ‘stamp duty’ instead of inheritance tax:

  • In Portugal, stamp duty is fixed at 10% and only applies to Portuguese assets
  • In Malta, tax is only charged when an indirect relative inherits property

There are no taxes on inheritances or gifts in Cyprus or Monaco.

Allowances and Exemptions

Tax-free allowances can vary greatly depending on your relationship with the heir. It’s often more punitive for less ‘traditional’ families, such as unmarried couples or those with stepchildren:

  • France offers a 100% tax-free allowance for spouses and €100,000 per parent for natural or adopted children but only €1,594 for stepchildren
  • In some Spanish regions, spouses and children can receive a 99%+ allowance, while others won’t offer any exemptions or recognise civil partnerships
  • In Portugal, married spouses and direct line ascendants/descendants won’t pay any stamp duty at all

Inheritance Tax Advice

Blevins Franks is highly specialised at advising expatriates on how to legitimately avoid or limit inheritance tax in the UK and your country of residence. We also provide a domicile determination service to establish whether you are still liable to UK inheritance tax.

See more about our estate planning services

Find more taxes on our Tax Planning page

Contact us for a consultation with your local adviser
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Blevins Franks Financial Management Limited (BFFM) is authorised and regulated by the Financial Conduct Authority in the UK, reference number 179731, to provide advice in the UK. Blevins Franks Wealth Management Limited (BFWML) is authorised and regulated by the Malta Financial Services Authority, registered number C 92917 to provide advice in Malta and other EU countries in line with its [IDD and MiFID] passporting permissions. It is authorised to conduct investment services under the Investment Services Act and authorised to carry out insurance intermediary activities under the Insurance Distribution Act. Where advice is provided outside of Malta via the Insurance Distribution Directive or the Markets in Financial Instruments Directive II, the applicable regulatory system differs in some respects from that of Malta. BFWML also provides taxation advice; its tax advisers are fully qualified tax specialists. Blevins Franks Trustees Limited (BFTL) is authorised and regulated by the Malta Financial Services Authority for the administration of trusts, retirement schemes and companies. Blevins Franks France SASU (BFF), is registered with ORIAS, registered number 07 027 475 to provide advice in France and other EU countries in line with its [IDD] passporting permissions, and authorised as ‘Conseil en Investissements Financiers’ and ‘Courtiers d’Assurance’ Category B (register can be consulted on  www.orias.fr). Member of ANACOFI-CIF. BFF’s registered office: 1 rue Pablo Neruda, 33140 Villenave d’Ornon – RCS BX 498 800 465 APE 6622Z. Garantie Financière et Assurance de Responsabilité Civile Professionnelle conformes aux articles L 541-3 du Code Monétaire et Financier and L512-6 and 512-7 du Code des Assurances (assureur MMA). BFFM, BFWML, BFF and BFTL are all part of the Blevins Franks Group Limited (BFGL) whose registered office is Gasan Centre, Triq il-Merghat, Zone 1, Central Business District, Mriehel CBD1020, Malta. This promotion has been approved and issued by BFWML, BFF and BFFM for respective use in the EU and UK.

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