French Inheritance Tax 2025: What UK Residents Need to Know

3. Siblings

• €15,932 tax-free allowance, then 35–45%

4. Nephews/Nieces:

• €7,967 tax-free allowance, then 55%

5. Unrelated Beneficiaries (or “Concubins”)

• €1,594 tax-free allowance, then 60%

6. Beneficiaries with Disabilities:

• An additional €159,325 allowance can apply, potentially giving them a total allowance of €259,325+ (depending on relationship).

Assurance Vie: The Right Way

Assurance Vie is widely used in France for estate and income tax benefits, but many expats unknowingly buy into expensive, restrictive products via local banks:

• High ongoing charges
• Limited investment options (often French equity-heavy)
• Lack of international diversification

We help clients access independent Assurance Vie platforms offering global equity exposure, ETFs, and efficient fee structures,  all while retaining French tax benefits.

⚖️ Concerned about your exposure to French and UK inheritance tax? Most expats we speak to are caught between two systems, without knowing it. Book a free consultation with a Cameron James adviser to understand your position and plan accordingly.

👉 Book My Free Consultation

UK Inheritance Tax: New Residency-Based Regime (From 6 April 2025)

As of 6 April 2025, the UK abolished its domicile-based inheritance tax regime and transitioned to a residency-based system. This marks a significant shift, particularly for UK nationals living in France or owning French assets, as it changes who falls within the scope of UK Inheritance Tax (IHT).

Old System: Based on Domicile

Previously, IHT liability was determined by domicile status.

• Individuals who were UK-domiciled or deemed domiciled were taxed on their worldwide estate.
  
• Non-domiciled individuals were only taxed on UK-situs assets, such as property or pensions based in the UK.

New System: Based on Residency

Under the new rules, IHT exposure is determined by an individual's UK residency history.

• From 6 April 2025, anyone who has been a UK tax resident for at least 10 out of the previous 20 tax years is classified as a Long-Term Resident (LTR).
  
• LTRs are liable for UK IHT on their worldwide assets, regardless of their current country of residence.

For example, James has been a UK resident for 11 years. Under the new regime, he is treated as a Long-Term Resident and will be taxed on his entire global estate.

Transitional Rules

There are special provisions for individuals who are neither UK resident nor UK domiciled in the 2025/26 tax year. These individuals will only be classed as LTRs if they meet the existing deemed domicile rules:

• UK resident for 15 of the previous 20 tax years, and
  
• UK resident in the current tax year or one of the three previous tax years.

This means someone like Helen, who had been a UK resident for 17 years and became non-resident in 2024/25, will still be treated as an LTR under the transitional rules and remain liable for UK IHT on her worldwide estate, even if she doesn’t return to the UK.

By contrast, if James were to leave the UK before 2025/26 and not return, he would avoid being treated as an LTR, as he wouldn’t meet the residency test in the transitional period.

Additional Considerations for Long-Term Residents (LTRs)

• New arrivals to the UK will not be treated as LTRs immediately. They benefit from a 10-year period during which they are only liable for IHT on UK-situs assets. Only once they meet the 10-out-of-20-year test will their worldwide estate fall within the scope of UK IHT.
  
• If an LTR makes gifts during their tail period, those gifts may still fall within the UK IHT net, even if the individual is no longer a resident or LTR at the time of death. This makes timing a key consideration in lifetime estate planning.
  
• The LTR test can be reset: if an individual has been non-UK resident for 10 consecutive years, their previous UK residency history is effectively disregarded. If they return to the UK after that, they would start the LTR calculation from zero.

Spouse Exemption & Post-2025 Election Rules

Under current UK IHT rules, a non-UK domiciled spouse or civil partner of a UK-domiciled individual can elect to be treated as UK deemed domiciled. This allows them to benefit from the full, uncapped spouse exemption, rather than the standard £325,000 limit that would otherwise apply.

Changes from 6 April 2025:

Following the transition to a residency-based regime:

• A non-LTR spouse or civil partner of an LTR individual will be allowed to elect to be treated as LTR for IHT purposes.
  
• This election ensures unlimited spousal exemption applies.
  
• The election will remain valid until the electing spouse has been non-UK resident for 10 consecutive tax years.

Transitional Provision:

• If an individual made a domicile election covering any period before 6 April 2025, they will be treated as deemed UK domiciled up to 5 April 2025, and as LTR from 6 April 2025 until they meet the 10-year non-residency condition.

Once the election lapses due to the 10-year non-residence rule, the individual’s ongoing IHT treatment will depend on whether they satisfy the new LTR test (i.e. UK tax resident for 10 out of the previous 20 years).

The new residency rules for UK IHT are a big shift. If you wish to speak with us about your situation or ask any questions, you can book a free consultation here.

The UK-France Double Taxation Treaty & Tax Planning

The UK–France Double Taxation Treaty aims to reduce the risk of individuals being taxed twice on the same estate. 

However, as the treaty predates modern Inheritance Tax rules (signed during the Estate Duty era before 1975), its application differs from newer treaties and may not always provide full protection.

Key Points:

• French-sited assets are generally taxed in France first under French succession tax rules.
  
• UK-situs assets are taxed in the UK under UK Inheritance Tax rules.
  
• A tax credit system is in place to prevent full double taxation on the same asset. However, the mechanism and extent of relief under the UK–France treaty may differ from newer IHT treaties with other countries.

Important Considerations:

• The treaty remains in force, and there are currently no changes to its operation following the UK's move to a residency-based IHT regime in April 2025.
  
• The UK has only 10 Inheritance Tax double taxation agreements (DTAs). Treaties with France, Italy, India, and Pakistan were created before 1975 and operate differently from more recent ones (e.g. those with the US or Switzerland).
  
• Due to differing thresholds, allowances, and rates between the UK and France, partial exposure in both jurisdictions is still possible, particularly for estates spanning both countries.

Lifetime Gifts & Gifting Strategies

• UK IHT: Gifts made 7+ years before death may be exempt.
  
• French IHT: Gift tax applies immediately but allowances reset every 15 years:
  
  • €100,000 per child
    
  • €31,865 per grandchild
    

Strategic gifting in France can reduce inheritance liabilities, especially if structured well in advance.

Real Case Example: Consolidating UK Assets in France

One client transferred three pensions (2 DC, 1 DB) into a single International SIPP while resident in France. With coordinated planning, we:

• Applied for NT tax code to withdraw gross
• Reviewed French IHT implications with a specialist
• Set up an Assurance Vie with global equity exposure
• Ensured estate alignment with Brussels IV

Outcome: simplified portfolio, reduced cross-border tax risk, and greater control.

Cameron James & Inheritance Tax Planning

At Cameron James, we specialise in:

• UK pension transfers (Defined Benefit/Final Salary, Defined Contribution).
• SIPP & QROPS for UK expats in France.
• Assurance Vie advice (for clients already set up in France).
• General investment advice for UK expats with French assets.

What We Do Not Do:

• We do not provide French tax advice or file French tax returns.
• We do not offer one-off 20-minute consultations for complex inheritance tax matters.

If you require legal or tax-specific advice, we can introduce you to our network of French tax specialists.Minimum Advice Fee: £3,000 for comprehensive financial planning.

Next Steps for UK Expats in France

Given the recent changes to UK inheritance tax rules, it’s important to reassess your current estate and succession planning strategies:

• Review your UK residency history
  Determine whether you qualify as a long-term resident or non-long-term resident, as this affects your UK IHT liability on worldwide assets.
  
• Clarify your exposure
  Understand how both UK and French inheritance tax systems apply to your situation, particularly for assets held across both jurisdictions.
  
• Review existing trusts
  Assess the impact of the new regime on any trusts you’ve established, especially if they are settler-interested and could carry unforeseen IHT consequences.
  
• Plan your residency strategically
  If you’re planning a move into or out of the UK, understand how your residency position affects your future tax exposure, including the transition rules post-departure.
  
• Update your will and consider Brussels IV
  Ensure your will reflects your current wishes and take advantage of the EU Succession Regulation 650/2012 to elect English law if appropriate.
  
• Seek expert advice
  We can introduce you to trusted French tax specialists within our professional network to help coordinate cross-border estate planning.

Secure Your Legacy with the Right Strategy

Inheritance tax is no longer just about where you're domiciled. For UK nationals living in France, the shift to residency-based UK tax rules introduces new complexity. If you’re affected by these changes, it’s important to review your current arrangements and seek expert advice to remain compliant and optimise your succession planning.

At Cameron James, we help clients structure their pensions and investments in line with cross-border tax regulations.

📞 Book a free consultation today to explore your estate planning options.

Disclaimer: Cameron James does not provide tax advice. We recommend consulting a specialist tax adviser for specific French or UK tax matters.