Reducing Inheritance Tax by changing domicile is not a step to take lightly — but it is worth understanding how it works, and how the UK compares with other countries.
“It takes a great deal of boldness and a great deal of caution to make a great fortune; and when you have got it, it requires ten times as much wit to keep it.” — Nathan Mayer Rothschild (1777–1836)
Is that still true? If you are very, very rich, it is relatively easy to keep it — by moving your domicile to a country with low or zero Inheritance Tax. However, the review below is really for amusement and initial guidance, because altering your domicile for this purpose would entail extensive legal and other advice, tailored to your individual circumstances.
England and Wales has a flat rate of 40% Inheritance Tax on the value of estates over about £350,000 — but with a number of exceptions for inheritance by children, and for agricultural land or business assets. If you want to minimise the IHT your estate will pay, and your assets exceed, say, £1 million (for example, if you own a house in the south of England), you will benefit from advice.
France has one of the most complex, and highest, inheritance tax regimes in Europe.
Spain’s inheritance tax is notoriously complex, because it operates at both national and regional level — each autonomous community has the power to offer its own allowances and reductions. Tax is paid by the beneficiary, not the estate, and depends on residence. Both inheritance on death, and lifetime gifts, are taxed at rates that increase with the amount given — from around £5,000 (8%) up to over £700,000 (34%) — though this varies by region.
These may be difficult places to get a right to reside in.
Swiss inheritance tax law varies drastically between the 26 cantons, but shares a few core principles:
Five cantons do levy a low tax on children:
| Appenzell Innerrhoden | 1% flat rate on amounts exceeding a CHF 300,000 allowance |
| Neuchâtel | 3% flat rate on amounts exceeding a CHF 50,000 allowance |
| Vaud | Progressive rates from 0.1% to 7% on amounts exceeding CHF 1,000,000 |
| Lucerne & Solothurn | Minor, low-rate taxes under specific thresholds |
Which canton’s rules apply depends on the type of asset: liquid and movable assets are taxed by the canton of the deceased’s last tax residence; real estate is taxed by the canton where the property is located, regardless of where the deceased lived. Cross-border inheritances are covered by treaties — Switzerland has bilateral inheritance tax treaties with, among others, the United Kingdom and the United States, to avoid double taxation.
Most US states do not levy an inheritance tax at all. As of 2026, only six states impose one:
| Iowa | Being phased out — fully repealed with effect from 2025 |
| Kentucky | 4%–16%, depending on the beneficiary’s relationship to the deceased |
| Maryland | 10% — the only state with both an estate tax and an inheritance tax |
| Nebraska | 1%–18%, rates recently reformed and reduced |
| New Jersey | 11%–16% — no estate tax, but has inheritance tax |
| Pennsylvania | 4.5%–15% — one of the higher rates |
Key points: inheritance tax is paid by the beneficiary; estate tax is paid by the estate itself. Surviving spouses are exempt in all six of the states above, and children or direct descendants are often exempt, or taxed at lower rates — unrelated beneficiaries typically face the highest rates. These state taxes are in addition to US federal estate tax, which carries a substantial exemption per individual, currently due to reduce (“sunset”) under existing legislation. Around a dozen further states, plus Washington DC, impose a separate estate tax rather than an inheritance tax.