The Differences Between Inheritance Tax in the UK and Spain

Since many people choose to spend their retirement years in stunning Spain (who can blame them?), it is helpful to understand how Spanish inheritance tax differs from UK inheritance tax. Understanding Spanish inheritance tax can be beneficial whether you are a resident or a visitor to Spain for an extended period. 

UK Inheritance Tax.

The amount owed by the estate on assets inherited from an estate is known as inheritance tax. If the deceased had property, it may be a substantial sum. Currently, any estate worth more than £325,000 is subject to a 40% inheritance tax rate. The UK also has the Residence Nil-Rate Band (RNRB) of up to £175,000$ (as of 2025/2026) when a primary residence is left to direct descendants (children, grandchildren, etc.). This means the effective tax-free threshold can be up to £500,000 per person.

For more detailed guidance on UK inheritance tax, visit GOV.uk Inheritance Tax.

How Much is Inheritance Tax in Spain?

You should make sure you understand exactly how the Spanish inheritance tax will impact you and your estate’s beneficiaries if you are a UK citizen with assets or property in Spain. The first significant distinction between inheritance tax in Spain and the UK is that, whereas assets given to your spouse in the UK are exempt from inheritance tax, in Spain, they are not. Children’s inheritance is not automatically exempt, but they benefit from the NRB and RNRB. In Spain, while inheritance is not exempt, direct descendants (children/spouse) receive significant tax-free allowances and deductions that vary significantly by region. When drafting your will, keep this in mind.

Your Children’s Inheritance 

In Spain, you must include a clause indicating that you want the inheritance to be divided in accordance with UK law, even though it is customary in the UK to specify in your will what is to be left to your children. In the absence of this provision, UK citizens with Spanish assets/residence will have to abide by Spain’s succession/forced heirship laws. According to Spanish succession regulations, your children must receive two-thirds of your assets. Researching the laws of the specific region you will be residing in is a smart idea, as the total amount of inheritance tax owed depends on where in Spain you are staying.

For assistance, contact Spanish Legal Matters to ensure your will aligns with Spanish law.

Rules Regarding Inheritance Tax in Andalucía

In addition to its abundance of activities, breathtaking scenery, and pleasant weather, Andalucía is also one of the greatest places to avoid inheritance taxes. With a staggering 1 million euros in tax-free benefits, Andalucía has surpassed Valencia as Spain’s most tax-friendly region. Andalucía is highly beneficial for Group I and II heirs. The specific1,000,000 allowance for these beneficiaries is a key feature, often meaning no tax is paid on inheritances up to that amount. It is crucial to consider all facets of your estate and your intended residence when creating your will. This will help you create a better future for your surviving loved ones.

For more information on inheritance and gifts in Spain, please visit administracion.gob.es.

For help with Spanish law, contact Spanish Legal Matters on 020 8150 2010, or for more information and advice visit our blog.