Cross-Border Inheritance Tax Planning in France: What British Expats Need to Know

For many British expatriates living in France, retirement planning receives significant attention. Estate planning, however, is often overlooked until much later.

Yet without appropriate  succession planning, your family could face unnecessary taxation, administrative delays and unintended consequences when your wealth passes to the next generation.

French succession laws differ significantly from the UK’s inheritance tax system, and when both jurisdictions become involved, the complexity increases considerably. Understanding how these systems interact is essential if you want to protect your wealth, support your loved ones and preserve your legacy.

Why Cross-Border Estate Planning Matters

If you are a UK national living in France, your estate may be affected by both French succession tax rules and UK inheritance tax legislation.

Without appropriate planning, your heirs could face:

• Higher inheritance tax liabilities
• Forced heirship considerations
• Delays in administering the estate
• Unexpected taxation on UK assets
• Complex reporting and compliance requirements

With appropriate planning and specialist advice, some of these challenges may be managed before they become more significant issues.

Understanding French Succession Tax

Unlike the UK’s inheritance tax system, which taxes the estate as a whole, France assesses succession tax on each beneficiary individually.

The amount of tax payable depends on:

• The relationship between the deceased and the beneficiary
• The value of the inheritance received
• Available allowances and exemptions

If you die as a French resident, French succession tax generally applies to your worldwide assets, regardless of where those assets are located. This means UK property, investments and other assets may all fall within the French succession tax regime.

Where UK assets are also subject to UK inheritance tax, double taxation agreements typically prevent the same assets from being taxed twice. However, beneficiaries often end up paying whichever liability is higher.

Frozen Tax Allowances Mean Higher Tax Bills

Both France and the UK have maintained inheritance tax allowances at largely unchanged levels for many years.

France’s tax-free allowance for children has remained at €100,000 since 2012, while the UK’s nil-rate band has remained frozen at £325,000 since 2009.

As asset values continue to rise, particularly property and investment portfolios, more families are becoming exposed to inheritance and succession taxes.

For many expatriates, failing to review existing arrangements could result in significantly larger tax liabilities than anticipated.

Not All Beneficiaries Are Treated Equally

One of the most important differences between the UK and French systems is how beneficiaries are taxed.

Children benefit from relatively generous allowances and progressive tax rates in France. Each child currently receives a €100,000 allowance, with tax rates beginning at just 5% before rising through the various bands.

However, the situation can be very different for other beneficiaries.

In France:

• Spouses and PACS partners generally benefit from succession tax exemptions
• Children receive favourable allowances
• More distant relatives face higher rates
• Unrelated beneficiaries may face succession tax rates of up to 60% on amounts above minimal allowances

These differences make estate planning particularly important for modern families.

Special Considerations for Blended Families

Blended families often face some of the greatest inheritance planning challenges in France.

Many expatriates assume that assets passing through a surviving spouse will eventually reach their children efficiently. Unfortunately, French succession rules can create very different outcomes.

For example:

• Children from previous relationships may not benefit from the same treatment as biological children of the surviving spouse.
• Long-term partners who are neither married nor in a PACS arrangement may face substantial tax liabilities.
• Stepchildren can potentially face succession tax rates of 60% on inherited assets.

Without careful planning, substantial portions of family wealth  may become subject to higher levels of taxation.

Estate planning for blended families should therefore be reviewed particularly carefully to ensure assets pass according to your wishes and in the most tax-efficient manner available.

The 2027 Pension Inheritance Tax Changes

One of the most significant developments affecting British expatriates is the planned inclusion of most UK pension funds within the scope of UK inheritance tax from 6 April 2027.

Historically, pensions have often provided an efficient wealth transfer vehicle. That position is changing.

From April 2027:

• Most unused UK pension funds are expected to become subject to inheritance tax.
• UK-resident beneficiaries may also face income tax liabilities on inherited pension funds where the pension holder dies after age 75.
• Combined taxation could significantly reduce the value ultimately received by beneficiaries.

For many expatriates, pensions represent one of their largest assets. As a result, these changes may substantially increase future inheritance tax exposure.

Reviewing UK Assets

Where broader retirement and succession planning considerations arise, expatriates may wish to review other UK assets as part of their overall planning strategy.Potential areas for consideration include:

• UK investment portfolios
• Property holdings
• Cash savings
• Non-pension investments

Moving assets into structures designed for French residents may provide administrative or succession planning advantages depending on individual circumstances and applicable tax treatment..As always, any restructuring should only be undertaken following professional advice and careful consideration of individual circumstances.

France vs UK: Which Is Better?

A common question is whether it is better to die as a UK resident or a French resident.

Unfortunately, there is no universal answer.

The outcome depends on factors including:

• Family structure
• Marital status
• Beneficiary relationships
• Asset values
• Asset locations
• Tax residency
• Existing planning arrangements

For families leaving wealth to children, the French system may in some cases compare favourably because each child receives their own allowance and tax rates begin at relatively low levels.

However, for unmarried couples or families with more complex circumstances, the French system may produce less favourable outcomes without careful planning.

The Importance of Professional Planning

Cross-border inheritance planning is one of the most complex areas of financial planning for expatriates.

A properly structured estate plan may help:

• Manage  inheritance tax exposure
• Improve succession outcomes
• Support the preservation of  family wealth
• Simplify estate administration
• Provide clarity for beneficiaries
• Align assets with your long-term objectives

Importantly, some inheritance tax planning opportunities can also improve your own ongoing tax position during your lifetime.

Protecting Your Legacy

Building wealth takes time, effort and careful financial decision-making. Reviewing how wealth may pass to the people you care about deserves careful consideration.

For British expatriates living in France, cross-border inheritance tax planning is no longer something to postpone. With inheritance tax thresholds frozen, pension reforms approaching and succession rules becoming increasingly important, early planning can make a significant difference to future outcomes.

At Blacktower Financial Management, we help expatriates navigate the complexities of UK and French succession planning, creating tailored strategies designed to support long-term financial planning objectives and provide greater clarity for future generations.

This article is for general information purposes only and does not constitute financial, legal or tax advice. Tax treatment depends on individual circumstances and may change in the future. Professional advice should always be obtained before taking action.