Spanish Inheritance Tax for UK Residents Inheriting Assets in Spain

How Spain taxes a heir who lives in the UK

ISD is charged on each heir, on what that heir receives. A heir who lives outside Spain is taxed only on assets in Spain (art. 7 Ley 29/1987). The State rates are progressive, then multiplied by a coefficient that depends on the heir's existing wealth and relationship to the deceased.

Until 2015 non-residents could not use the more generous regional rules. A 2014 EU court ruling (C-127/12) led to a change for EU and EEA residents; Spanish Supreme Court rulings from 2018 extended it to residents of other countries, and since July 2021 the law gives every non-resident heir the same regional rules as a resident (Ley 29/1987, second additional provision, as amended by Ley 11/2021). If the deceased lived in Spain, the heir uses that region's rules; if not, the rules of the region where the Spanish assets have the highest value.

The return (Modelo 650) is filed with the State tax agency (AEAT), not a regional tax office, because the tax of non-resident heirs is not handed over to the regions (Ley 22/2009, art. 32). The deadline is six months from the death, with a possible extension if requested within the first five months (RD 1629/1991 arts 67 and 68). A heir who lives outside the EU and EEA, which includes the UK, must appoint a representative resident in Spain for this tax and file the signed appointment with the return (Ley General Tributaria art. 47; RD 1629/1991 art. 18).

Regional relief for close family

For children, spouses and parents, most regions now reduce the tax to little or nothing: Andalucía, Madrid, Valencia, the Balearics, the Canaries and Murcia all give relief of 99% or more on the tax due. Catalonia is the main exception, with full relief only for spouses and a sliding scale for children. Madrid and Valencia have also introduced partial relief for siblings, nephews and nieces.

The rules that apply are those in force on the date of death; this guide describes the position for deaths in 2026. Several regions changed their rules between 2021 and 2026, and some reliefs depend on conditions, such as filing on time. Check the region's current law, or ask an adviser, before relying on a figure.

Filing late

A late return still has to be filed. Without a prior request from the tax office, the surcharge is 1% plus 1% for each full month of delay up to 12 months, then 15% plus late-payment interest; it is cut by 25% if paid promptly (Ley General Tributaria art. 27). Some regional reliefs are lost if the return is late.

UK inheritance tax and double taxation

On the UK side this guide uses the 2026/27 tax year. For deaths on or after 6 April 2025, UK inheritance tax reaches assets outside the UK, such as a Spanish home, only if the deceased was a long-term UK resident: broadly, UK resident for at least 10 of the previous 20 tax years. Someone who has left the UK stays within scope for a period of 3 to 10 years. For earlier deaths, the old test of domicile or deemed domicile applies.

There is no inheritance tax treaty between the UK and Spain. Where both countries tax the same asset, the UK gives a credit for the Spanish tax, but only up to the UK tax on that asset (IHTA 1984 s.159). Spain gives its own credit only to heirs who live in Spain (art. 23 Ley 29/1987), so a UK-resident heir's relief comes from the UK side. The credit has to be claimed in the UK inheritance tax return.

Planning is done before death, not after

Both taxes are fixed by the position at death, so planning has its effect during the owner's lifetime. A will can choose the law of the owner's nationality to govern the succession (EU Succession Regulation art. 22); that choice affects who inherits, not how much Spanish tax is due. Tax planning needs advice in both countries.

Common errors about inheritance tax

"There is a UK-Spain inheritance tax treaty." There is no inheritance tax treaty between the UK and Spain (HMRC Inheritance Tax Manual IHTM27161). Where both countries tax the same asset, the UK gives a credit for the Spanish tax, but only up to the UK tax on that asset (IHTA 1984 s.159).

"UK inheritance tax turns on domicile." For deaths on or after 6 April 2025, UK inheritance tax reaches assets outside the UK, such as a Spanish home, only if the deceased was a long-term UK resident: broadly, UK resident for at least 10 of the previous 20 tax years (GOV.UK, Inheritance Tax if you're a long-term UK resident). For earlier deaths, the old test of domicile or deemed domicile applies.

"Spain taxes the worldwide estate of a heir who lives in the UK." A heir who lives outside Spain is taxed only on assets in Spain (art. 7 Ley 29/1987).

"Late filing costs 5%, 10%, 15% or 20%." Those are not the current figures. Without a prior request from the tax office, the surcharge is 1% plus 1% for each full month of delay up to 12 months, then 15% plus late-payment interest; it is cut by 25% if paid promptly (Ley General Tributaria art. 27).

"The tax is paid to the region where the property is." The return (Modelo 650) is filed with the State tax agency (AEAT), not a regional tax office, because the tax of non-resident heirs is not handed over to the regions (Ley 22/2009, art. 32).