We deal with UK and Spain Succession Estates problems having offices and a network of Uk Tax advisors, maybe you should consider to have a consultation with us regarding not just only if your Will need to be reviewed after Brexit.
It is necessary to plan your future Estate regarding your home abroad, as at some times the HMRC can consider a Spanish right as the Usufruct, as another British law right, a life interest trust, making a fiction that it is not legally binding but if you do not act you will have to pay between 10% to 40% of Uk inheritance Tax from the Spanish property plus penalties.
The Usufruct, a Roman Law figure, by nature is a temporary right, and in Spanish Law can have a limited time or condition term, or can be done for life.
Being for life as it was in the case we had from a lady (mother) who bought this right once she died, then and without not Deeds, Probate, Will or Confirmation process, the consolidation of the domain is automatic by Law, as it is established at the Act Spanish Civil Code articles numbers 467, 468, 513 and 609, and the faculties to use the property are recovered for the owner or nudo propietario.
The Spanish Law regarding taxes for this case, establish that there is not Inheritance Tax applicable and make a clear distinction regarding where the Usufruct arises from a lucrative contract or Deeds. Then the only Tax to be paid is “Transmisiones”the ITP (equivalent to the Uk Stamp Duty) or the one to be paid for the Community in this case, being Canary Island General Indirect Tax called the IGIC.
To create a general fiction bearing in mind there is a split in ownership is not a correct way to understand the Spanish Law and it is against the nature of the Life (vitalicio) Usufruct that is not heritable by Law.
Jose Luis Martinez Hens
@spainlawyers