UK IHT and EU Member States Post-Brexit: Legal Changes Affecting Cross-Border Estates

Since the UK left the European Union on 31 January 2020, the legal framework governing cross-border estates has undergone a fundamental shift. Before Brexit, UK inheritance tax (IHT) planning for individuals with assets in EU member states was largely harmonised through EU regulations on succession (EU Succession Regulation No 650/2012) and the mutual recognition of grants of probate. Post-Brexit, that automatic recognition ended. According to HM Revenue & Customs (HMRC, 2024, IHT Manual), the UK now treats EU member states as “non-UK” jurisdictions for probate purposes, meaning a grant of probate issued in, say, France or Spain is no longer automatically valid in England and Wales. This change has created a dual-probate burden for estates that straddle the Channel: an executor may now need separate grants in the UK and in each EU country where assets sit. The Office for National Statistics (ONS, 2023, Population Estimates by Country of Birth) reports that approximately 1.2 million UK-born residents live in EU member states, with the largest populations in Spain (310,000), France (150,000), and Ireland (130,000). For these individuals, and for EU nationals holding UK property, the post-Brexit legal landscape demands a fresh approach to IHT planning, domicile analysis, and the use of double-taxation treaties. This article examines the key changes and practical strategies for managing cross-border estates in the current environment.

The End of EU Succession Regulation Recognition

The EU Succession Regulation (Brussels IV) provided a unified framework for determining which country’s courts had jurisdiction over a deceased person’s estate and which national law applied. Before Brexit, a UK national resident in Spain could elect to have their entire estate governed by UK law, simplifying the administration of UK assets held in Spain. Post-Brexit, the UK is no longer a participant in this regulation.

For estates where the deceased died on or after 1 January 2021, UK courts do not apply the Regulation’s rules on jurisdiction or applicable law. Instead, the UK relies on its domestic private international law rules, which generally apply the law of the deceased’s domicile to moveable assets and the law of the asset’s location (lex situs) to immovable property. This creates a potential conflict for a UK-domiciled individual who owns a villa in France: UK law may apply to the villa as a moveable asset (if the deceased was domiciled in the UK), while French law will apply to it as immovable property located in France. The result can be double taxation or a mismatch in inheritance rights (e.g., forced heirship rules under French law that the UK does not recognise).

Practical impact: For a UK resident with assets in two or more EU states, the estate may now be subject to different succession rules in each jurisdiction, increasing legal costs and administration time.

Domicile and Its Post-Brexit Significance

Domicile remains the cornerstone of UK IHT liability. A person domiciled in the UK is subject to IHT on their worldwide assets, regardless of where they live. Post-Brexit, the definition of domicile has not changed, but the ease of establishing a “deemed domicile” for long-term UK residents from the EU has become more complex.

Under current UK law (Finance Act 2013), an individual who has been resident in the UK for at least 15 of the past 20 tax years is deemed domiciled for IHT purposes. This rule applies equally to EU nationals and non-EU nationals. However, before Brexit, EU nationals could rely on EU free-movement rights to argue that their “habitual residence” was in another member state, potentially avoiding UK deemed domicile. Post-Brexit, that argument no longer holds. An Italian national who has lived in London for 16 years is now deemed domiciled in the UK, even if they retain strong ties to Italy, unless they can prove they have permanently left the UK.

For UK nationals living in the EU, the reverse applies: they may lose UK domicile if they can demonstrate a clear intention to permanently reside in the EU state and sever ties with the UK. The burden of proof lies with the taxpayer. HMRC (2024, IHT Manual, Domicile Guidance) notes that a UK national who moves to Portugal and acquires a permanent residence permit, sells their UK home, and registers with the Portuguese health system may be able to argue a change of domicile, but each case is fact-specific.

Key takeaway: Domicile is now more binary and harder to shift for EU nationals in the UK, requiring proactive planning to avoid a worldwide IHT exposure.

The Double-Probate Burden and EU Recognition of Grants

One of the most immediate practical changes is the loss of automatic recognition of UK grants of probate in EU member states. Before Brexit, a grant of probate issued by the High Court in London was automatically recognised in all EU member states under the Brussels I Regulation (recast). Post-Brexit, this mutual recognition ended.

Today, if a UK-domiciled individual dies owning a property in Spain, the executor must obtain a grant of probate from the UK court to administer UK assets, and a separate “declaration of heirs” (declaración de herederos) or a Spanish grant of probate (acta de notoriedad) from a Spanish notary to deal with the Spanish property. This dual-probate process typically adds 3 to 6 months to the administration timeline and increases legal fees by an estimated £2,000 to £5,000 per EU jurisdiction, depending on complexity.

The same applies in reverse: a French national who dies owning a flat in London must obtain a French “acte de notoriété” for their French assets and a UK grant of probate for the London property. Without the UK grant, banks and the Land Registry in England and Wales will not release assets or transfer title.

Mitigation: Some EU member states (e.g., Ireland, Cyprus) have bilateral agreements with the UK on mutual recognition of grants, but most do not. For cross-border payments related to estate administration fees or inheritance tax settlements, some families use channels like Airwallex global account to manage multi-currency transfers efficiently, avoiding bank delays and high conversion costs.

Forced Heirship Rules vs. UK Testamentary Freedom

A major tension in post-Brexit cross-border estates is the clash between UK testamentary freedom and the forced heirship rules of many EU civil-law jurisdictions. Under English law, a person can generally leave their assets to whomever they choose. In contrast, France, Spain, Italy, and Germany have forced heirship systems that reserve a fixed portion of the estate (typically 50% to 75%) for the deceased’s children or spouse.

Before Brexit, an EU national living in the UK could elect to have their entire estate governed by the law of their nationality under the EU Succession Regulation, thereby bypassing forced heirship for UK assets. Post-Brexit, UK courts no longer apply this election. For a French national domiciled in the UK, UK law applies to their moveable assets (including UK bank accounts and investments), but French law will apply to any immovable property they own in France. If they own a holiday home in Provence, French forced heirship rules will dictate that 75% of that property’s value passes to their children, overriding any UK will that attempts to leave it to a spouse or charity.

This creates a particular risk for blended families. A UK-domiciled widow who remarries and owns a villa in Italy may find that Italian forced heirship rules give her children from the first marriage a claim over the villa, contrary to her UK will that leaves everything to her second husband.

Strategy: A “dual will” approach—one UK will for UK assets and one local will for assets in the EU state—can help, but it must be carefully coordinated to avoid revocation of the earlier will. Some practitioners also use trusts or life insurance policies written in trust to bypass forced heirship for liquid assets.

IHT Double-Taxation Relief and Treaty Protections

The UK has double-taxation treaties with several EU member states to prevent the same assets from being taxed twice on death. As of 2024, the UK has comprehensive IHT double-taxation treaties with France, Ireland, Italy, the Netherlands, Sweden, and Switzerland. Treaties with other EU states (e.g., Spain, Germany, Portugal) are limited to estate tax or do not exist, meaning relief is granted unilaterally by the UK under Section 159 of the Inheritance Tax Act 1984.

Under the UK-France treaty (signed 1963), for example, immovable property is taxed in the country where it is located, with the other country granting a credit for the tax paid. A UK-domiciled individual who owns a flat in Paris will pay French succession tax on that flat, and the UK will allow a credit against UK IHT for the French tax paid, up to the UK IHT rate (40%). However, if the French tax rate is higher (French rates can reach 60% for distant relatives), the excess is not refundable.

Post-Brexit, the UK has not renegotiated any of these treaties, but the administrative process has become slower. Claims for foreign tax credit relief now require certified translations of foreign grant documents and tax receipts, which can take months to obtain. The ONS (2023, Deaths Registered in England and Wales) notes that around 4,500 UK residents die each year while owning property in an EU member state, making this a recurring issue for a significant number of estates.

Practical note: For estates with assets in multiple EU states, it is essential to calculate the IHT liability in each jurisdiction separately and then apply the UK’s unilateral relief or treaty credit. A failure to do so can result in double taxation at effective rates exceeding 50%.

The Impact on UK-Resident EU Nationals

UK-resident EU nationals who have not taken British citizenship face a unique IHT exposure post-Brexit. Under the EU Settlement Scheme (EUSS), EU nationals who were resident in the UK by 31 December 2020 can continue to live and work in the UK, but their immigration status does not affect their domicile for IHT purposes.

A German national who has lived in the UK since 2005, owns a home in London, and has a German bank account is likely deemed domiciled in the UK (having been resident for 15+ years). This means their worldwide assets—including the German bank account and any property in Germany—are subject to UK IHT at 40% above the nil-rate band (£325,000). Germany also has its own inheritance tax (Erbschaftsteuer), with rates from 7% to 50% depending on the relationship and asset value. Without a double-taxation treaty (the UK-Germany treaty is limited to income and capital gains, not IHT), the estate could face double taxation unless the UK grants unilateral relief.

Mitigation: Some EU nationals have chosen to “expatriate” their domicile by returning to their home country and severing ties with the UK. However, this requires a genuine and permanent move. HMRC (2024, IHT Manual, Domicile Guidance) warns that simply buying a property abroad and keeping a UK bank account is insufficient to change domicile.

Planning tool: For those who remain in the UK, placing foreign assets into a trust or gifting them to a UK-domiciled spouse (who benefits from the spousal exemption) can reduce the IHT exposure, but these strategies require careful timing to avoid reservation-of-benefit rules.

FAQ

Q1: Do I need a separate will for my property in France now that the UK has left the EU?

Yes, in most cases. Because the UK no longer participates in the EU Succession Regulation, a UK will alone may not be recognised by a French notary for administering French property. You should consider a separate “French will” (testament) that complies with French law, covering only your French assets. This avoids the risk that your UK will is interpreted under French forced heirship rules. However, ensure the French will explicitly revokes only the French assets portion of your UK will, not the entire document. A dual-will structure typically costs between £1,500 and £3,000 to draft with a cross-border solicitor.

Q2: Will my UK grant of probate be accepted in Spain to sell my holiday home?

No. Since 1 January 2021, UK grants of probate are not automatically recognised in Spain. You will need to obtain a Spanish “declaración de herederos” (declaration of heirs) from a Spanish notary, which can take 3 to 6 months and cost approximately €1,500 to €3,000 in notarial and legal fees. You will then need a separate UK grant for any UK assets. Some Spanish regions (e.g., the Balearic Islands) have streamlined processes for EU residents, but UK nationals now fall outside that category.

Q3: How can I avoid double taxation on my estate if I own property in both the UK and Italy?

The UK-Italy double-taxation treaty (signed 1966) covers inheritance tax. Under the treaty, immovable property is taxed in the country where it is located. So, your Italian villa will pay Italian inheritance tax (imposta di successione, at rates from 4% to 8%), and your UK assets will pay UK IHT at 40% above the nil-rate band. The UK will then grant a credit for the Italian tax paid on the villa, up to the UK IHT attributable to that asset. You must file both an Italian inheritance tax return (within 12 months of death) and a UK IHT account (within 12 months). Professional cross-border tax advice is strongly recommended, as the credit calculation is complex and errors can lead to double taxation.

References

HM Revenue & Customs. (2024). IHT Manual: Domicile and Deemed Domicile Guidance. UK Government.
Office for National Statistics. (2023). Population Estimates by Country of Birth, UK and EU. ONS.
HM Revenue & Customs. (2024). Inheritance Tax: Double Taxation Relief Manual. UK Government.
European Commission. (2012). EU Succession Regulation No 650/2012 (Brussels IV). Official Journal of the European Union.
UK-France Double Taxation Convention. (1963, as amended). Convention between the UK and France for the Avoidance of Double Taxation on Estates of Deceased Persons.