Inheritance Tax: The best places to retire abroad to avoid the HMRC levy

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In the UK, Inheritance Tax is paid based on the value of an estate above £325,000 and is charged at 40 percent on anything above that mark.

If an estate includes property, that threshold is raised by £175,000, bringing the total to £500,000.

In this regard, Express.co.uk has examined the rates of IHT in other countries, and where those thinking about moving abroad to avoid inheritance tax may choose to consider.

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Italy

It used to be the case that there was no Inheritance Tax paid in Italy, but Italians are not so lucky today.

Inheritance Tax was reintroduced in Italy in 2006, although the rate remains low by European standards.

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Unlike the UK’s system, the Italian taxman considers the relation of the deceased to the inheritors. This means some inheritors may pay more than others, depending on their relation to whoever passed away.

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For a widowed partner or children, no inheritance tax is paid on the estate up to the value of about £850,000, or
€1million.

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Even above this rate, the tax is only paid at four percent, and for inheritors who are more distant to the deceased, there is a €100,000 threshold up to which point no tax is paid.

After this point, the levy is six percent.

France

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In France, transfers between spouses are Inheritance Tax free, and children enjoy a tax-free allowance up to €100,000 each.

After this point, however, the tax can vary widely between about five percent and 45 percent depending on how much there is in the estate.

Spain

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Spanish Inheritance Tax is paid according to the number of beneficiaries and their relation to the original owner of the estate.

The taxable amount on the estate is reduced for every descendent in line to inherit and reduced by a lesser amount for any other related beneficiaries.

Widowed partners are required to pay, but usually only a small amount.

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Furthermore, 95 percent of the value of the family home is tax-free provided the inheritors continue to live there for at least 10 years down the line.

In Spain, Inheritance Tax can also very between regions. Sometimes it will be paid at a low of little over seven percent and other times at a high of 34 percent.

USA

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Across the pond, Inheritance Tax rates range from 18 percent to 40 percent, although former President Donald Trump brought in some very generous tax-free allowances.

These mean people can inherit $11.2million tax free and this increases to an eye-watering $22.4million when a married couple passes on their wealth.

The globe at a glance

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Anyone looking not to pay any Inheritance Tax at all may do well to consider Australia or New Zealand as destinations, where no Inheritance Tax is charged at all.

There may be combinations of local laws and variable rates that mean people should take expert advice before making the decision to relocate.

It should also be noted that if the UK Government considers someone legally domiciled in the UK when they die, even if they are abroad, they will take a healthy bite out of an inheritance.

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