Dealing with overseas property or accounts in a UK estate

Domicile decides the tax, location decides the process

Two different questions get confused here.

For inheritance tax, what matters is where the person was domiciled, broadly their permanent home for tax purposes. If they were UK domiciled (or treated as long-term UK resident under the rules that replaced deemed domicile), UK inheritance tax applies to their worldwide estate, including the Spanish flat. If they were not, only UK-situated assets are in scope.

For the practical business of getting hold of the money, what matters is where the asset sits. Each country applies its own succession law and its own procedure.

You will usually need a second, local process

In most countries a notary or local lawyer handles the transfer, using a certified and often apostilled copy of the UK grant plus a sworn translation. In some Commonwealth countries the UK grant can be 'resealed' under the Colonial Probates Act, which is faster and cheaper than a fresh application.

Budget for local fees. Notary and lawyer costs on a European property commonly run into thousands, and some countries charge their own inheritance or transfer tax on the local asset before it can be released.

Forced heirship and local wills

Several countries, including France, Spain and Italy, reserve a share of an estate for children regardless of what the will says. EU succession rules let people elect for the law of their nationality to apply, and many British owners did exactly that in their will. Check whether the will contains such an election, it changes who inherits.

If there's a separate local will covering the foreign asset, check the two wills don't accidentally revoke each other. This is a common and expensive mistake.

Double taxation relief

If both the UK and another country tax the same asset, you can usually claim relief so it isn't taxed twice. The UK has estate tax treaties with a small number of countries including the USA, France, Italy, the Netherlands, South Africa, Sweden, Switzerland, India and Pakistan. Where there's no treaty, HMRC gives unilateral relief for the foreign tax paid on the foreign asset, capped at the UK tax on the same asset.

You claim this on form IHT417 (foreign assets) alongside the IHT400. Keep the foreign tax receipts, HMRC will ask for them.

Practical order of work

What to do, roughly in this order:

• List every foreign asset with a date-of-death value in local currency and in sterling at the date-of-death exchange rate
• Get the UK grant first, most foreign processes need it as their starting document
• Order extra official copies, one per country at minimum, plus apostilles
• Instruct a local lawyer or notary in each country, ideally one who deals with British estates regularly
• Claim double-tax relief on IHT417 once foreign tax has actually been paid