Inheritance tax

DIYHero

https://forums.moneysavingexpert.com/discussion/comment/82017043#Comment_82017043

That won't work for them as they are Spanish and the Spanish tax person will want a payment each year on the house in the UK that they would part own. The eldest as work it out it would cost them around 1200 euros each per year and would most likely increase each year. Plus they would have to pay 40% inheritance tax on it when I die.

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/82017555#Comment_82017555

They would not own any part of the house, legal ownership would be held in trust (immediate post death interest trust) you would become the sole beneficial owner and if would form part of your estate for IHT purposes. They would not become owners until your death.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82017585#Comment_82017585

I think the difficulty here is Spain as a jurisdiction does not readily recognise the tax concepts behind UK trusts and neither is there an express double tax agreement between UK and Spain related to inheritance tax ( the agreements covers income and capital gains tax only).

Accordingly, the subtleties of UK's IPDI trusts where remaindermen beneficial rights are dormant until death of life tenant, maybe difficult to convey to the Spanish tax authorities, so the reaction of the Spanish resident beneficiaries is not unreasonable in the circumstances.

Actually the fact that Spanish resident beneficiaries of a UK estate ( absent a formal DTA) can face domestic succession tax in Spain on a UK inheritance subject to IHT, is something I myself am having to investigate given I have a substantial UK exposure now aggravated by IHT on pension pots.

Thus far research indicates my only effective solution is to leave the UK, and rack up the necessary 10 years non residence to fully escape the IHT net. Investment in UK government gilts whilst non UK resident, then becomes an interim measure whilst running down the 10 year clock.