Thailand is one of the few destinations covered in this series that has its own inheritance tax, which puts it in a different category from the UAE, Singapore, Cyprus, and Malta. For British expats in Thailand, the succession picture therefore involves two potential inheritance tax charges rather than one: a Thai charge on locally held assets above a certain threshold, and the UK’s 40% charge on worldwide assets for those who remain UK-domiciled. Understanding how each operates, and where a portfolio bond addresses both, is essential before assuming the problem belongs entirely to one system or the other.
Thailand’s Inheritance Tax
Thailand introduced an inheritance tax in 2016. Confirmed by PwC’s Worldwide Tax Summaries (last reviewed 2 February 2026), the tax applies to legacies received from any individual testator where the total inherited value exceeds THB 100 million, approximately £2.2 million at current exchange rates. Amounts below that threshold are fully exempt.
For those above the threshold, the rate is 5% for heirs who are ascendants or descendants of the deceased (parents, children, grandchildren), and 10% for all other heirs. Spouses are fully exempt from the inheritance tax regardless of the estate size. Assets within the scope of the tax include Thai immovable property, securities, bank deposits and similar financial accounts, registered vehicles, and financial assets prescribed by royal decree.
In practice, the THB 100 million threshold means Thailand’s inheritance tax does not apply to most British retirees’ Thai-held assets. A British retiree who owns a Thai condominium (the only property structure generally available to foreign nationals), holds a local bank account, and keeps most of their wealth in overseas investment accounts will in many cases be below the threshold for any single testator’s estate. However, for those with more substantial Thailand-based holdings (or whose worldwide estate when aggregated would exceed this level), the Thai charge is real and should be planned around.
It is also worth noting that Thailand does not have a general gift tax on lifetime transfers, and that the CRS reporting framework means Thai financial account holdings are visible to other tax authorities, including HMRC, so the overall estate picture is transparent to both jurisdictions.
UK Inheritance Tax Does Not Stop at the Thai Border
Regardless of the Thai position, most British nationals in Thailand remain UK-domiciled under HMRC’s framework and therefore exposed to UK inheritance tax at 40% on their worldwide estate above the nil-rate band of £325,000. Domicile is not determined by residence; it tracks the deeper legal concept of where a person’s permanent home is intended to be. For British nationals who retain family, property, financial, or emotional ties to the UK, or who have not formed a genuine and settled intention to remain in Thailand permanently, HMRC will treat them as UK-domiciled.
A UK-domiciled British expat in Phuket whose worldwide estate comprises a UK property, a UK investment portfolio, a Thai condominium, and an overseas portfolio bond faces UK IHT at 40% on the combined value above £325,000, regardless of the fact that their Thai assets are not subject to Thai inheritance tax at their scale. The two systems operate independently.
From April 2025, the UK introduced a residency-based reform to IHT: once you have been non-UK resident for ten consecutive tax years, your non-UK assets begin to phase out of UK IHT exposure. For British expats who have been in Thailand for many years and who consistently pass the HMRC Statutory Residence Test as non-UK resident, this creates a meaningful planning horizon. But for those in the first decade of Thai residency (the majority of the British community in Thailand), UK IHT on worldwide assets remains fully in scope.
Succession Without a Will in Thailand
British nationals in Thailand who die without a valid will covering Thai-situs assets are subject to Thai intestacy rules under the Civil and Commercial Code. Thai law recognises six classes of statutory heir in a fixed priority order, with spouses having a concurrent right alongside the relevant class. For British expats in Thailand whose family structure does not map neatly onto Thai intestacy categories (cohabiting partners without legal marriage, stepchildren, or beneficiaries outside the direct family line), the outcome of intestacy can be significantly different from what the deceased intended. A Thailand-specific will, ideally alongside a UK will covering UK assets, is important groundwork even before considering more sophisticated structures.
Thai probate can also be slow. Obtaining a court order to administer a Thai estate (even one with a valid will) takes time, and during the process Thai assets are frozen. For beneficiaries who are UK-resident and not familiar with the Thai legal system, the practical administration of a Thai estate can be considerably more cumbersome than the tax position alone suggests.
The Named Beneficiary Mechanism
A portfolio bond, an international investment-linked insurance policy written out of a jurisdiction such as the Isle of Man or Guernsey, bypasses both the Thai probate process and, with appropriate structuring, the UK IHT exposure on the policy value.
A portfolio bond is a life assurance contract. On death, the insurer pays the policy proceeds directly to the named beneficiaries, outside the estate and outside the probate process in any jurisdiction. The policy value does not form part of the Thai estate; it is a contractual payment from an offshore insurer to named individuals. It does not go through the Thai court system, it is not frozen during estate administration, and it reaches beneficiaries directly and promptly regardless of where they are based.
For the Thai inheritance tax position, the policy proceeds are an insurance payment rather than an inherited asset, and accordingly fall outside the categories of assets subject to Thailand’s inheritance tax. This is particularly relevant for larger estates where the Thai threshold might otherwise be approached.
For the UK IHT dimension, the mechanism requires a trust structure. A portfolio bond held directly by the policyholder remains within the UK estate for IHT assessment. 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 the 40% charge. This is long-established planning, well understood by UK IFAs and cross-border advisers, and available through providers such as RL360, Hansard, Friends Provident International (FPI), and Utmost International, all of which write Isle of Man or Guernsey-based structures suitable for British expats in Thailand.
Portability: Because Thailand Is Often Not the Final Destination
Many British nationals in Thailand (particularly retirees) maintain a realistic possibility of returning to the UK if health, family circumstances, or a change in visa conditions makes it appropriate. Others move on to other Asian destinations. A portfolio bond written from the Isle of Man or Guernsey is designed to remain in force through those moves. The named beneficiary designation and trust arrangement travel with the policy, and the structure that addresses UK IHT in Thailand continues to function back in the UK or elsewhere without being rebuilt from scratch.
For British expats in Thailand who have not yet reviewed their succession position (particularly those whose UK estate including overseas assets exceeds the nil-rate band), the combination of a Thai will covering local assets and a portfolio bond in trust for the investment portfolio provides a practical and well-tested framework. Request a free consultation here