Malta has no inheritance tax, no estate duty, and no gift tax. For British expats who have spent years navigating the UK’s 40% inheritance tax charge, this is a genuinely welcome feature of Maltese residency. But for most British nationals in Malta (who retain their UK domicile of origin regardless of how long they have lived on the island), the absence of Maltese inheritance tax does not resolve the succession picture. HMRC’s reach is longer than Malta’s borders, and understanding where it stops is essential before assuming the problem is solved.
Malta’s Succession Framework: What There Is and Is Not
Malta imposes no inheritance, estate, or gift taxes. Confirmed by PwC’s Worldwide Tax Summaries (last reviewed 19 February 2026), assets passing on death from a Malta-resident individual are not subject to any Maltese succession tax charge, regardless of the size of the estate or the relationship between the deceased and the beneficiary.
What Malta does impose is stamp duty on certain transfers, including inheritances of immovable property situated in Malta and shares in Maltese companies. Stamp duty on inherited immovable property is charged at 5% of value in principle, though significant reliefs apply. From 28 October 2025, the threshold for the reduced rate of 3.5% on an inherited dwelling house was raised to €400,000. Further exemptions apply where the property passes to a surviving spouse or cohabitant, to a disabled beneficiary from a parent or guardian, or from a parent to direct-line descendants in respect of a dwelling house. Shares in Maltese companies pass at a stamp duty rate of 2%.
For a British family in Malta whose estate consists primarily of a Maltese property passing to children, the stamp duty exposure on the local property is therefore modest and in many cases exempt. The more significant issue lies elsewhere.
UK Inheritance Tax Does Not Stop at the Maltese Shoreline
HMRC charges inheritance tax at 40% on the worldwide estate of UK-domiciled individuals above the nil-rate band of £325,000. Domicile is not the same as residence. Most British nationals who move to Malta retain their UK domicile of origin (the domicile acquired at birth), unless they have taken deliberate and demonstrable steps to establish a domicile of choice in Malta, including forming a genuine and settled intention to remain there permanently and to abandon the UK as their domicile. For many British expats in Malta (who retain UK family ties, UK property, a UK pension, or simply a realistic possibility of eventual return), that standard is not met. HMRC’s assessment of domicile is conservative, and the burden of proof rests with the individual.
The result is that a British national who has lived in Malta for five or even ten years, who owns a Maltese property, and who holds investments in an Isle of Man portfolio bond, may still have their entire worldwide estate (the Maltese property, the investment portfolio, UK assets, assets held anywhere in the world) within the scope of UK inheritance tax at 40% above £325,000.
From April 2025, the UK introduced a significant reform: a residency-based test for IHT on non-UK assets. Under the new rules, once you have been non-UK resident for ten consecutive tax years, your non-UK assets begin to phase out of the UK IHT net. For long-term British residents in Malta who have consistently passed the HMRC Statutory Residence Test as non-UK resident, this creates a planning horizon that matters. But for those in the first decade of Malta residency (which covers the majority of British expats currently on the island), UK IHT on worldwide assets remains fully in scope. Malta’s absence of local inheritance tax does not reduce that exposure by a single pound.
The Named Beneficiary Mechanism and What It Achieves
A portfolio bond (an international investment-linked insurance policy written out of a jurisdiction such as the Isle of Man or Guernsey) addresses both the practical succession process and the UK IHT exposure through the same structural feature: the named beneficiary designation.
A portfolio bond is a life assurance contract. On death, the policy proceeds are paid directly to the named beneficiaries by the insurance company, outside the estate and outside the probate process. In Malta, this means the policy value bypasses the Maltese inheritance administration entirely: beneficiaries receive the proceeds directly without waiting for a Maltese court grant or navigating the local succession procedure. For non-family beneficiaries who might otherwise face stamp duty on inherited Maltese assets, the policy proceeds (being a life insurance payment rather than an estate transfer) sidestep that charge on the policy value.
For the UK IHT dimension, the mechanism requires proper structuring. A portfolio bond held directly by the policyholder remains within the UK estate for IHT assessment if the policyholder is UK-domiciled. However, where the policy is written in trust (using an offshore trust arrangement that holds the policy outside the policyholder’s estate), the death benefit can in many circumstances fall outside the UK taxable estate and outside the 40% charge. This is established planning used by UK IFAs and cross-border advisers for decades. It requires specialist structuring from the outset: the trust instrument, the interaction with HMRC’s gift with reservation of benefit rules, and the correct relationship between the trust and the policy all need to be right. Retrospective restructuring after a terminal diagnosis is rarely effective.
The combination of a portfolio bond held in an appropriately structured trust, with named beneficiaries, can therefore achieve two things simultaneously: bypassing Malta’s probate process for the policy value, and removing that value from the UK IHT calculation on the policyholder’s death.
Portability and the Longer View
Malta suits many British expats as a long-term base, but it is also used as a stepping stone: to other Mediterranean destinations, or eventually back to the UK. A portfolio bond written from the Isle of Man or Guernsey travels with the policyholder. If you subsequently move to Cyprus, to Portugal, or back to the UK, the policy remains in force under the same terms, with the same named beneficiaries and the same trust arrangement. The succession structure does not need to be rebuilt in each new jurisdiction. For British expats who are not certain that Malta is their final destination, this portability is a meaningful practical advantage: the estate planning work done today continues to function wherever life takes you next.
Providers such as RL360, Hansard, Friends Provident International (FPI), and Utmost International all offer Isle of Man or Guernsey-based structures suitable for British expats in Malta, with trust arrangements available through their platforms. If you have not yet reviewed your succession position since moving to Malta, particularly the UK IHT exposure on your worldwide estate, it is worth doing so before your circumstances change. Request a free consultation here