UK Inheritance Tax for Expats Living in Malta: Scope, Exemptions, and More

If you’re a UK expat who has resided in Malta for a considerable amount of time and are currently focused on estate planning, you may encounter a potentially complex tax scenario. You need to consider both the UK’s inheritance tax (IHT) and Malta’s taxation regulations, after which you should devise a tax-efficient strategy that maximizes the wealth your dependents will receive.

This guide will help you do so by covering:

• Key rules regarding the UK inheritance tax for expats living in Malta
• Taxation thresholds, IHT rates, and exemptions
• Estate planning considerations and advice

Is There Inheritance Tax for UK Nationals in Malta?

Whether IHT will apply to your estate mainly depends on your residency. In April 2025, the UK replaced domicile with a long-term residency test for IHT, defining a long-term resident as someone who meets one of the following two rules:

1. Being a UK tax resident for 10 out of the previous 20 tax years
2. Being a resident for 10 consecutive years prior to the current tax year

UK tax residence is determined by the Statutory Residence Test (SRT), which encompasses several specific tests, most notably:

• Automatic UK tests
• Automatic overseas tests
• Sufficient ties tests

As a general rule, you are considered a UK tax resident if you spend 183 or more days within a tax year in the UK. Additional tests only apply if you do not satisfy this condition, in which case you will be considered a resident if:

• You meet at least one automatic UK test or the sufficient ties test
• You meet none of the overseas tests

Due to such nuances, combined with the general complexities of the SRT, determining your tax residency (and the related IHT implications) may be challenging. You may wish to engage a tax professional to accurately define your liabilities.

Scope of Taxable Assets Under UK IHT

If you are deemed a long-term UK tax resident, your worldwide estate is subject to UK IHT. This includes Maltese assets, such as:

• Bank accounts
• Investments
• Life insurance proceeds

In addition to typical assets, unused portions of UK-registered pensions will also be subject to IHT from 2027 as per the proposed tax reforms.

British expats who no longer qualify as long-term UK residents are only subject to IHT on UK-based assets. Any property or other assets you have acquired in Malta are out of scope, so you can exclude them from your taxable estate.

UK IHT Rates and Allowances

The basic UK IHT charge is 40% on the value of the estate above the nil-rate threshold, which is £325,000 per person for the tax year 2025/26. No IHT is payable if your estate is under this value or if you leave any assets above it to:

• Your spouse or civil partner
• A charity
• A community amateur sports club

The 40% rate only applies to the portion that exceeds the threshold, not the entire estate. If you leave at least 10% of the net value of certain assets to charity, the estate will pay a reduced IHT of 36%.

If you pass down a qualifying home to direct descendants, no IHT is paid on up to £175,000 per person. This means that the nil-rate band can be up to £350,000 for a couple, and any unused portion of it can be transferred to the surviving spouse or civil partner.

Gifts may also be subject to IHT unless you gave them more than seven years before death. The applicability of IHT mainly depends on the value of the gift and the recipient, with specific allowances applying to different scenarios.

For example, gifts of up to £3,000 annually are exempt from IHT. The same applies to individual gifts of up to £250, which you can give as many times as you want if you have not used another allowance on the recipient.

Gifts for marriages and civil partnerships are treated separately and capped depending on the recipient:

Recipient	Tax-Free Gift Limit
Child	£5,000
Grandchild or great-grandchild	£2,500
Other recipients	£1,000

Does Malta Have an Inheritance Tax?

Malta does not impose a general inheritance or estate tax like the UK. Instead, it levies a Capital Transfer Duty (CTD), which is a form of stamp duty on inherited Maltese assets (mainly real estate and shares).

For real estate, the standard duty is 5% of the property’s market value, although there are several reductions and exemptions, most notably:

• Sole residence: If the inherited property is a home that the beneficiary will use as their sole residence, the first €200,000 of the property’s value is charged at 3.5%, with the excess at 5%
• Primary residence share: If a surviving spouse or civil partner inherits the deceased’s share of their main home, no duty is charged
• Parents’ residence: Children inheriting a parent’s residence are exempt from duty, provided the inheritance is declared within 1 year

These allowances mean that property transfers between direct family members are typically free of CTD.

As for inherited shares of Maltese companies, CTD is 2%. The only exception is if the company mainly holds real estate, in which case the duty is 5%.

Maltese inheritance laws also differ from British regulations in the procedural aspects. While the UK IHT is settled from the deceased’s estate, Maltese tax residents directly pay CTD. They must register the inheritance by executing a Declaration Causa Mortis via a notary public and pay the duty.

The process must be completed within one year of death. Otherwise, beneficiaries may incur a penalty of 4% per year and may forfeit certain allowances (e.g., the parent’s residence exemption).

How To Prevent Double Taxation of Your Estate

In some situations, both Malta and the UK may impose taxes on your estate. For instance, if a long-term UK tax resident passes away while owning Maltese property, the estate and beneficiaries may theoretically owe the UK IHT and CTD on that property.

While the UK does not have a specific treaty with Malta regarding IHT, it does provide credit-based unilateral relief.

In practice, this means that tax paid overseas on UK assets can be credited against UK IHT, limited to the amount of UK tax due on those assets. Conversely, if Malta charges CTD on a property, any UK IHT due on that property could be reduced by crediting the Maltese duty.

You can use the relief to prevent the same assets from being taxed twice, although such overlaps are quite rare in the first place. This is especially true if you are no longer a UK tax resident, in which case each country will only tax assets held within its borders.

Key Considerations for Tax-Effective Estate Planning

Given that UK tax residency is the key determinant of your IHT obligations, the most important consideration to make when planning your estate is your total residency period. Calculate your consecutive and/or total years of non-residency to assess if it is possible to limit IHT only to UK-based assets.

Additional aspects of estate planning to focus on include:

• Reliefs: Both the UK and Malta offer various tax reductions and complete reliefs, so explore them fully. For instance, you can use lifetime gifts older than seven years to remove assets from your estate and claim any spouse/child reliefs for principal residences in Malta
• Life insurance: UK expats often obtain a life insurance policy written in trust to cover an expected UK IHT liability. Proceeds from such policies are also out of the estate due to the insurance wrapper, which enables unburdened inheritance
• Succession laws and wills: Maltese succession law includes forced heirship rules, so close family members are entitled to fixed shares of any estate. To prevent these rules from taking precedence, maintain valid wills in both the UK and Malta

Cross-border estate planning is often complicated and time-consuming due to the diverse regulatory landscape you will encounter. To prevent excessive taxation of your estate and maximize inheritance for your dependents, partner with Nomad Capitalist.

Develop a Tax-Efficient Estate Plan With Nomad Capitalist

Nomad Capitalist is an advisory firm that has helped over 1,500 high-net-worth individuals relocate across the globe and manage their wealth without regulatory or administrative obstacles. Our experts can help optimize your estate’s tax liability to maximize the retention of inherited wealth.

We can make this happen as a part of our Action Plan—a structured, personalized strategy that accommodates your unique circumstances to help you achieve your lifestyle and financial goals. To obtain the Plan, you only need to complete a quick questionnaire that determines if we are a good fit.

If so, our team will:

1. Conduct a 45-minute onboarding call to gather all the relevant information
2. Analyze your circumstances and draft the Action Plan accordingly
3. Present the Plan so that you can assess its alignment with your goals
4. Implement the Plan over the following 12 months
5. Provide lifetime support for any notable changes

Relocate across jurisdictions effortlessly and confidently while protecting your wealth—get your Action Plan today!