UK inheritance tax and wills: protecting your family’s UK property

Living in the Gulf does not remove UK inheritance tax

Since 6 April 2025, UK inheritance tax depends on where you have lived rather than on domicile. A person who has not lived in the UK for at least 10 of the previous 20 tax years pays it only on assets located in the UK — and UK property is a UK asset.

So an owner living in Kuwait, Saudi Arabia or the UAE with an apartment in Manchester can owe UK inheritance tax on it, even though GCC countries do not charge inheritance tax themselves. With some planning, the bill can often be reduced and the handover made far smoother for the family.

How the tax is worked out

• The rate is 40% on the value above the tax-free allowance (the nil-rate band) of £325,000, which is frozen until April 2031.
• The extra £175,000 residence allowance only applies to a home the person lived in that passes to children or grandchildren, so it does not usually help with a let investment property.
• A mortgage taken out to buy the property generally reduces its taxable value.
• Anything left to a husband or wife is usually free of inheritance tax, and an unused allowance can pass to the surviving spouse.
• Owning through a company does not remove the tax: since 2017, shares in any company, UK or overseas, that holds UK homes are treated as UK assets.

A worked example

An investor living in Kuwait owns two UK apartments worth £250,000 and £230,000, with £120,000 still owed on mortgages, and leaves them to their children:

• Value of the two apartments: £480,000
• Less mortgages: £120,000, leaving £360,000
• Less the nil-rate band: £325,000, leaving £35,000 taxable
• Inheritance tax at 40%: £14,000
• Without the mortgages, £155,000 would be taxable and the tax would be £62,000.

Paying the tax and getting probate

Inheritance tax is due six months after the end of the month of death. On property it can usually be paid in ten yearly instalments, with interest on the unpaid balance. Before the property can be sold or transferred, the executors need a UK grant of probate, and part of the tax must normally be paid first.

For an owner who lived abroad, probate can take many months. A clear UK will and an organised file of the property’s documents shorten that time considerably, while the letting agent keeps collecting the rent.

Why a UK will matters

Who inherits land in England is decided by English law, wherever the owner lived. Without a valid will, the English intestacy rules apply: a surviving spouse receives the personal belongings, a fixed sum and half of the rest before the children share the remainder. That can be very different from the shares set by Islamic inheritance.

A will made in the Gulf can be valid in England, but probate based on it is usually slower and needs translations and legal evidence. Many families make a separate English will that covers UK assets only, written so that it works alongside their Gulf will rather than cancelling it. English law lets you leave property as you choose, so a UK will can follow the Islamic shares confirmed by a scholar.

Joint ownership: choose the right type

When two or more people buy together, the solicitor will ask how they want to hold the property. The choice matters on death:

• Joint tenants: when one owner dies, their share passes automatically to the other owners, whatever their will says.
• Tenants in common: each owner has a defined share that passes under their own will — usually the better fit for families following Islamic inheritance.
• Joint tenants can change to tenants in common later with a simple notice registered at HM Land Registry.

Planning options to discuss with an adviser

• Gifts during your lifetime: a gift to your children is free of inheritance tax if you live for seven more years, and the tax reduces on a sliding scale after three. A gift of UK property is treated as a sale at market value for capital gains tax, and you must not keep benefiting from it, for example by taking the rent.
• Keeping a mortgage: a mortgage used to buy the property reduces its taxable value. Borrowing later to release cash has strict rules, so take advice first.
• Life insurance written in trust: a policy can pay the expected tax bill, so your heirs do not need to sell to pay it.
• Ownership structure: holding as tenants in common, or through company shares, can make it simpler to divide the property between heirs.
• Trusts: the rules for trusts that hold UK property are complex and changed in 2025, so use them only with specialist advice.

How BPG helps

We introduce GCC families to UK solicitors experienced in English wills for Muslim clients and in probate for overseas estates, and we keep a clear record of each property we help you buy, so your executors can act quickly when the time comes.

This article is general information, not legal or tax advice. Inheritance tax rules change, and every family’s situation is different, so take advice from a qualified UK solicitor or tax adviser before acting.