By Dr Angelo Chirulli ACA ADIT BFP CPA (Ita)

Mail: angelo@vectigalistax.co.uk

Alessandro moved to the UK in the late 1990s with a suitcase, a degree in engineering, and big hopes for the future. Twenty-five years later, he lives in Surrey with his wife Elena and their two children, Sofia and Marco. He’s now a British citizen, owns a family home in the UK, and considers himself firmly rooted in British life.

But back in Italy, Alessandro still owns three properties: his parents’ old house in Lecce, a flat in Milan rented out to students, and a small villa in Martina Franca where his family spends every August. He also has a bank account in Italy with savings from his earlier years, plus some shares in a mid-sized Italian company he inherited from his father.

For years, he didn’t give much thought to these assets. “They’re family things,” he would say. “They’ll go to the children one day.”

It wasn’t until a close friend passed away unexpectedly—and his family faced a lengthy and expensive tax process—that Alessandro began to ask: what would actually happen if I died tomorrow?

The UK tax net: wider than many think

As a UK resident—and someone who has lived in the UK for more than 15 years—Alessandro is considered deemed domiciled in the UK for inheritance tax (IHT) purposes. This means that his entire worldwide estate, including properties and investments in Italy, is fully within the scope of UK IHT.

At death, the value of Alessandro’s estate—after any available exemptions and allowances—could be taxed at 40%.

He was stunned. “But my Milan flat? My Italian savings? They’re in Italy. How can HMRC tax them?”

This is a common misconception. UK IHT doesn’t care where the assets are located. What matters is the taxpayer’s domicile status. Once you’re deemed domiciled, global assets are exposed—unless proper planning is put in place.

The numbers

Alessandro’s situation looked like this:

• UK main residence: £800,000
• Three Italian properties: total value €1.1 million (~£940,000)
• UK investment portfolio: £250,000
• Italian bank account: €80,000 (~£68,000)
• UK savings: £50,000
• Italian shares: €100,000 (~£85,000)

Total estate value: approx. £2.2 million

Available allowances:

• Nil-rate band: £325,000
• Residence nil-rate band: up to £175,000 (if the family home passes to direct descendants)

Taxable estate: approx. £1.7 million
Estimated UK IHT: £680,000

Even worse, the Italian assets might also trigger Italian succession tax, especially if Alessandro’s children are resident in Italy or if the assets remain registered there. Italy charges inheritance tax on assets located in its territory, even if the deceased lived abroad. The rates are lower (4% for transfers to children), but the double tax risk is real.

A lack of planning multiplies the risk

At that point, Alessandro began to realise that without any UK or Italian wills, no trust planning, and no clear succession structure, he was leaving behind a complex—and expensive—problem.

What was at stake wasn’t just tax. It was also time, legal fees, and family stress. Dealing with Italian succession formalities (such as land registry updates, bank releases, and potential notarial procedures) takes time—often months or years—and without proactive planning, it can be costly.

Four practical steps he took  

1. He instructed a dual-qualified lawyer to prepare two separate wills — one governing his UK-situs assets, and another covering Italian property. We advised that this approach, while commonly adopted in cross-border estates, must be carefully coordinated to avoid conflicting provisions or unintended revocations. Particular attention was paid to succession law elections under the EU Succession Regulation (Brussels IV), ensuring it did not inadvertently affect his UK inheritance tax exposure.
2. He explored the possibility of making a lifetime gift of one Italian property to his children. From a UK perspective, we outlined the implications of such a transfer as a potentially exempt transfer (PET) for inheritance tax purposes. We advised that this may be effective in reducing the taxable estate over time, provided he survives seven years, but also highlighted the need to assess any Italian gift tax implications and practical conveyancing costs before proceeding.
3. We discussed UK trust planning and family company structures as possible tools for longer-term succession and asset protection.  
4. He appointed an Italian tax agent to document his Italian assets and support any future coordination with HMRC in the event of a double taxation scenario. We advised him to keep detailed records of acquisition dates, original cost bases, and legal title, so that foreign tax credits (under UK unilateral relief) could be substantiated if required. We also highlighted the importance of proactive disclosure in his UK estate to avoid delays in probate or compliance enquiries.

The bigger picture

Alessandro’s case is not unique. Many Italian families living in the UK own homes or investments in Italy. They often assume that these foreign assets will be taxed only in Italy. In reality, once you’re caught by the UK inheritance tax net, even your grandmother’s vineyard can become a liability.

Planning early means not only reducing tax, but also saving your family from avoidable stress and conflict.

Alessandro now sleeps better. His children know what will happen, his wife is informed, and his assets are in order. No one wants to think about death, but the real legacy lies in the preparation.

If you live in the UK and hold property, savings, or shares abroad, ask yourself: is my estate protected—or exposed?

To speak confidentially about cross-border inheritance tax and succession planning, contact Angelo Chirulli at angelo@vectigalistax.co.uk or visit www.vectigalistax.co.uk