Inheritance Tax Brazil vs UK — Comparison 2026

British nationals living in Brazil face two entirely different inheritance tax systems that can both claim tax on the same assets simultaneously. The UK charges Inheritance Tax (IHT) at 40% on worldwide estates above £325,000 based on domicile — not residence. Brazil charges ITCMD at state-level rates of 2–8% based on asset location and, post-LC 227/2026, on foreign assets received by Brazilian domiciliaries. While a 1967 UK-Brazil double taxation convention exists, it covers income and capital gains only — not inheritance or gift taxes. Planning without understanding both systems risks effective tax rates exceeding 45% on cross-border estates.

How Do UK IHT and Brazilian ITCMD Compare?

How Does UK Inheritance Tax Work?

UK IHT under the Inheritance Tax Act 1984 (IHTA 1984) applies to the worldwide estate of any person who is domiciled in the UK at death.

“British expats in Brazil face the worst of both worlds: UK IHT at 40% following domicile, and Brazilian ITCMD at up to 8% following asset situs — with no inheritance tax treaty to resolve the overlap. Planning is not optional; it is the only defense against a combined rate that can exceed 45%.” — Zachariah Zagol, Founding Partner, OAB/SP 351.356 The concept of domicile is distinct from residence and far more difficult to shed.

The Nil-Rate Band and RNRB

Every individual receives a nil-rate band (NRB) of £325,000. Estates valued below this threshold owe no IHT. The NRB has been frozen at £325,000 since 2009 and is legislatively fixed through at least April 2028.

An additional Residence Nil-Rate Band (RNRB) of £175,000 applies when the deceased’s main residence passes to direct descendants (children, grandchildren). The RNRB tapers for estates above £2 million, reducing by £1 for every £2 above that threshold.

For married couples and civil partners, any unused NRB and RNRB can transfer to the surviving spouse, creating a combined exemption of up to £1,000,000 before IHT applies.

The 40% Rate

Everything above the nil-rate band(s) is taxed at 40%. A reduced rate of 36% applies if the estate leaves at least 10% of the net estate to charity.

Unlimited Spouse Exemption — With a Catch

Transfers between UK-domiciled spouses are entirely exempt from IHT — no limit. However, if the receiving spouse is not UK-domiciled, the exemption is capped at the NRB level (£325,000). The non-domiciled spouse can elect to be treated as UK-domiciled for IHT purposes (Finance Act 2013 provisions), but this brings their worldwide estate into the UK IHT net — a trade-off requiring careful analysis.

Potentially Exempt Transfers (PETs)

Lifetime gifts become exempt from IHT if the donor survives seven years after making the gift. If death occurs within seven years, taper relief reduces the IHT on the gift: 0–3 years = 40%, 3–4 years = 32%, 4–5 years = 24%, 5–6 years = 16%, 6–7 years = 8%.

How Does Brazilian ITCMD Work?

Brazilian ITCMD is a state-level tax governed by each of the 26 states plus the Federal District. The Brazilian Constitution (Art. 155, I) grants states the power to tax causa mortis transmissions and donations.

Key features relevant to UK nationals:

1. Asset situs rules. Real property is taxed by the state where it is located. Financial assets are taxed by the state where the estate is processed (generally the deceased’s last domicile). Post-LC 227/2026, foreign assets inherited by Brazilian domiciliaries are taxed by their state of residence.

2. Progressive rates. Following the 2026 reform, all states must implement progressive rates up to 8%. São Paulo’s new table ranges from 2% (up to 10,000 UFESPs) to 8% (above 280,000 UFESPs).

3. Meação is not inheritance. The surviving spouse’s community property share (meação) under Brazil’s default comunhão parcial de bens regime is not subject to ITCMD because it never belonged to the deceased. Only the inheritance portion is taxed.

4. No meaningful personal exemption. Unlike the UK’s £325,000 NRB, Brazilian states typically exempt only minimal values — São Paulo exempts estates below approximately R$82,000.

For a full breakdown of ITCMD rates by state, see our dedicated guide.

Does the 1967 UK-Brazil Treaty Cover Inheritance Tax?

No. The Convention between the Government of the United Kingdom and the Government of the Federative Republic of Brazil for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains (signed 1967, amended by protocol) covers:

• UK income tax, corporation tax, and capital gains tax
• Brazilian income tax (imposto de renda)

The treaty does not cover UK Inheritance Tax or Brazilian ITCMD. Article 2 of the Convention lists the taxes covered, and neither IHT nor ITCMD appears. There has been no supplementary protocol extending coverage to succession taxes.

This means there is no treaty-based mechanism to:

• Allocate taxing rights between the UK and Brazil on inherited assets
• Provide automatic credits for taxes paid in the other country
• Resolve disputes through mutual agreement procedures on inheritance matters

Can I Get Any Relief for Double Taxation?

UK side: HMRC may grant unilateral relief under IHTA 1984, Section 159. This allows a credit for foreign tax paid on overseas property that is also subject to UK IHT. However, this credit is limited to the lower of the UK IHT attributable to that property and the foreign tax paid. It does not eliminate double taxation entirely — particularly when Brazilian ITCMD is paid on a different tax base or at different rates than UK IHT.

Brazil side: Brazil generally does not offer a unilateral credit for foreign inheritance taxes paid. Some tax scholars argue that the principle of non-bis in idem should apply, but there is no statutory mechanism for claiming IHT paid in the UK as a credit against ITCMD.

What Is the UK Domicile Concept and Why Does It Matter?

UK IHT follows domicile, not residence. This is the single most important concept for British expats in Brazil to understand.

Domicile of Origin

Everyone receives a domicile of origin at birth — typically the domicile of their father (or mother, depending on circumstances). For most British nationals born in the UK, their domicile of origin is in England, Scotland, Wales, or Northern Ireland.

Domicile of Choice

To acquire a new domicile of choice (e.g., in Brazil), you must:

1. Physically reside in Brazil
2. Intend to remain permanently — this is the critical test

The burden of proof is on the person claiming to have shed UK domicile. HMRC will look at evidence including: whether you retained UK property, UK bank accounts, UK club memberships, whether you expressed an intention to return to the UK, where your children are educated, where your will was made, and dozens of other factors.

HMRC’s 15/20-year deemed domicile rule: Under reforms effective from April 2017, anyone who has been UK resident for at least 15 of the previous 20 tax years is deemed UK-domiciled for IHT purposes — regardless of their actual domicile. This means a Brazilian-domiciled person who was UK resident for 15+ years remains within the UK IHT net.

Practical Implication

A British citizen who has lived in Brazil for 10 years, considers Brazil home, has Brazilian permanent residency, and intends to stay permanently — may still be considered UK-domiciled by HMRC if they retain ties to the UK. This could expose their worldwide estate (including Brazilian assets) to 40% UK IHT.

How Should British Expats in Brazil Plan Their Estates?

Step 1: Determine Your Domicile Status

Before any planning, establish whether HMRC would consider you UK-domiciled. This requires professional analysis of your factual connections to the UK and Brazil. If you left the UK recently or maintain significant UK ties, assume you remain UK-domiciled until you can demonstrate otherwise.

Step 2: Understand the Interaction of Both Tax Systems

A UK-domiciled person dying with assets in Brazil faces:

• UK IHT on worldwide assets (including Brazilian property) at 40% above £325,000
• Brazilian ITCMD on Brazilian-situs assets at 2–8%
• Limited HMRC credit for ITCMD paid on Brazilian assets under Section 159

A person who has acquired Brazilian domicile and shed UK domicile faces:

• Brazilian ITCMD on Brazilian assets and (post-LC 227) on foreign assets received by Brazilian-domiciled heirs
• UK IHT only on UK-situs assets (real property in the UK, UK bank accounts over £5,000 with certain exceptions)

Step 3: Coordinate Wills Across Jurisdictions

British expats in Brazil should maintain two coordinated wills: a Brazilian will covering Brazilian assets and a UK will covering UK assets. The wills must be drafted so that neither inadvertently revokes the other.

Brazil’s forced heirship rules (Código Civil Art. 1,845–1,850) require that 50% of the estate go to herdeiros necessários (compulsory heirs: descendants, ascendants, spouse). The freely disposable portion is the remaining 50%. UK law has no forced heirship — the Inheritance (Provision for Family and Dependants) Act 1975 allows claims but does not mandate fixed shares.

“The coordinated dual-will strategy is non-negotiable for British clients with assets in both countries. A single UK will attempting to cover Brazilian assets creates a probate nightmare that adds a year or more to the process.” — Zachariah Zagol, Founding Partner, OAB/SP 351.356

Step 4: Consider Asset Restructuring

• Holding company structures can centralize Brazilian real estate and reduce ITCMD base in some states, though LC 227/2026 introduced anti-avoidance provisions for holdings used primarily for succession planning.
• Life insurance proceeds are generally exempt from both UK IHT (if written in trust) and Brazilian ITCMD (Art. 794 of the Código Civil, though some states challenge this post-reform).
• Pension assets — UK pensions (SIPPs, personal pensions) are generally outside the estate for IHT if the scheme administrator has discretion over death benefits. Brazilian previdência privada (VGBL/PGBL) receives favorable treatment in many states.

Step 5: Lifetime Gifting Strategies

• In the UK: Potentially Exempt Transfers become IHT-free if you survive 7 years. Annual exemption of £3,000 per year.
• In Brazil: Donations trigger immediate ITCMD at progressive rates. However, pre-LC 227/2026 rates were generally lower and flat in many states. The window for lower-rate donations in some states may close by January 2027.

See our estate planning checklist for a structured approach to cross-border planning.

What About UK Non-Dom Status Post-2025 Reforms?

The UK government announced significant changes to the non-dom regime effective from April 2025. The traditional remittance basis is being replaced with a new residence-based system:

• New arrivals to the UK who have been non-UK resident for at least 10 years get a 4-year FIG (Foreign Income and Gains) regime — no UK tax on foreign income/gains during that period
• After the 4-year window, worldwide income and gains become taxable
• For IHT, there will be a transition to residence-based charging, but deemed domicile rules continue to apply in modified form during the transition

Impact for Brazilians moving to the UK: The new regime is less generous than the old non-dom system. Brazilians who move to the UK should plan their asset structures before arrival.

Impact for UK non-doms in Brazil: If you left the UK and were non-dom, the transition rules may affect whether your worldwide estate remains in the IHT net. Professional advice is essential during this transition period.

What Marital Property Regime Applies?

The intersection of UK and Brazilian marital property law creates complexity:

• Brazil default: Comunhão parcial de bens (partial community of property) — assets acquired during the marriage are shared equally. The surviving spouse’s meação is 50% of marital property and is not subject to ITCMD.
• UK: England and Wales have no community property regime. Marital assets are divided by the court on divorce under equitable principles, but on death, the estate passes per the will or intestacy rules.

For British-Brazilian couples, the applicable marital property regime depends on where the marriage was celebrated, whether a prenuptial agreement exists, and potentially which country’s law governs the matrimonial property.

Frequently Asked Questions

Do British citizens in Brazil pay UK inheritance tax?

It depends on domicile, not citizenship. A British citizen who has acquired a domicile of choice in Brazil and shed their UK domicile of origin is not subject to UK IHT on non-UK assets. However, proving you have shed UK domicile is difficult, and HMRC scrutinizes claims carefully. The deemed domicile rule also applies if you were UK resident for 15 of the past 20 tax years. UK-situs assets (property, certain bank accounts) remain subject to IHT regardless of domicile.

Is there double taxation on inheritance between the UK and Brazil?

Yes, double taxation is possible. The 1967 UK-Brazil treaty covers income and capital gains, not inheritance tax. HMRC may grant unilateral relief under Section 159 IHTA 1984 for ITCMD paid on Brazilian-situs property, but this credit is limited and may not eliminate double taxation entirely. Brazil offers no statutory credit for UK IHT. Planning is essential to minimize overlap — see our estate planning consultation service.

Should I make a Brazilian will if I already have a UK will?

Yes. A Brazilian will (testamento) significantly simplifies and accelerates the probate process for Brazilian assets. Without one, your UK will must be apostilled, translated by a sworn translator, and presented to a Brazilian court — adding months and expense. Your Brazilian will must respect forced heirship rules. Both wills must be coordinated so that the Brazilian will doesn’t inadvertently revoke the UK will and vice versa.

Can I use a trust to avoid both UK IHT and Brazilian ITCMD?

Trusts are treated very differently in each jurisdiction. UK IHT charges discretionary trusts at a 6% periodic charge every 10 years and 20% on entry above the NRB. Brazil historically had no trust legislation, but LC 227/2026 now subjects trust distributions and certain trust events to ITCMD. Using a trust to avoid both taxes simultaneously is extremely complex and may not be effective. See our trust advisory and trusts in Brazil guide for detailed analysis.

Why ZS Advogados?

Cross-border succession between Brazil and the UK involves two legal traditions — common law and civil law — with fundamentally different approaches to inheritance. Zac Zagol leads our estate planning practice with direct experience serving British clients navigating both systems. We coordinate with UK solicitors on wills, liaise with HMRC on domicile questions, and structure Brazilian assets to minimize the combined tax burden.

Schedule a consultation to map your cross-border exposure, or contact us to discuss your situation. For an overview of all succession services, visit our estate planning hub.