Deceased UK domiciled with Czech property

I was wondering if anyone could help me. I am preparing IHT forms for a deceased Czech born individual but domiciled in England and Wales. He owned a 75% share in a property in Prague which by Czech law automatically goes to his remaining brother (only sibling) by survivorship (he was never married, had no children and no parents surviving). He made a UK Will to give all his assets to his brother. I understand that there is no inheritance tax to pay according to Czech inheritance tax rules. Is there any relief I can claim in my IHT forms for the Czech property?

Thank you!

Nicola Cannell
David Morgan Jones

The usual UK IHT rules will apply, no matter where the property is.

You say the deceased was E&W domiciled, in which case IHT is chargeable on worldwide assets.

The brother is a non-exempt beneficiary for IHT purposes, so unless any of the “normal” IHT exemptions apply, IHT will be chargeable (APR and BPR can apply to Czech land for example, but from the sounds of it, they are irrelevant here).

Don’t forget s173 IHTA 1984 however – you can claim the costs of administering the Czech land, up to 5% of its value – so do get a quote from a Czech lawyer before submitting your IHT return.

In terms of the applicable succession law, are you sure Czech law applies? Don’t forget the EU Succession Regulation and the possibility of making both express and implied choices of law, in which case there is no renvoi back to Czech law.

Christopher Salomons
Russell-Cooke LLP