Scottish Inheritance Tax Considerations
UK-wide rules with Scottish property law differences and succession rights
Key Takeaways
- • UK inheritance tax rates and thresholds apply throughout Scotland
- • Scottish property law creates unique succession rights
- • Legal rights can override will provisions and affect tax planning
- • Different procedures for obtaining confirmation vs probate
UK Tax Rules Apply in Scotland
There is no separate "Scottish Inheritance Tax". Inheritance Tax (IHT) is a UK-wide tax administered by HMRC. The same rules, rates and thresholds apply in Scotland as elsewhere in the UK. What differs is the estate administration and certain Succession (Scots) law concepts.
- • £325,000 nil rate band
- • £175,000 residence nil rate band
- • 40% tax rate (36% with charity relief)
- • Same business and agricultural reliefs
- • Legal rights for spouses and children
- • Different property ownership rules
- • Confirmation process (not probate)
- • Unique succession law provisions
Confirmation (Scotland) instead of Probate
In Scotland, executors apply for Confirmation (not "probate"). The process differs from England and Wales, though the underlying inheritance tax obligations remain the same.
For Excepted Estates
You normally complete Form C1 (Confirmation Inventory). C5 is not used for deaths on or after 1 January 2022.
For Non-Excepted Estates or IHT Due
You complete IHT400 (HMRC) alongside the Scottish Confirmation process. Check the Sheriff Court/ScotCourts guidance for procedure details.
Excepted Estates (Scotland)
For deaths on or after 1 January 2022, C5/IHT217 are generally not required. Use C1(2022) and follow the updated HMRC notes for Scottish estates. If the estate does not qualify as excepted, file IHT400.
Legal Rights under Scots Law (Impact on IHT)
Spouses/civil partners and children have legal rights to fixed fractions of the moveable estate, regardless of the will. These rights are treated as claims against the estate and can reduce the value exposed to IHT. HMRC's IHT manual and the IHT400 include Scotland-specific prompts about legal rights.
Jus Relictae/Jus Relicti (Spouse's Rights)
Surviving spouse entitled to 1/3 of moveable estate if there are children, or 1/2 if no children. This applies regardless of what the will says.
Legitim (Children's Rights)
Children entitled to 1/3 of moveable estate if surviving spouse exists, or 1/2 if no surviving spouse. Applies to all children, including those disinherited in the will.
Moveable vs Heritable Property
Scottish law distinguishes between moveable property (money, shares, personal belongings) and heritable property (land and buildings). Legal rights only apply to moveable property, which creates planning opportunities.
- • Cash and bank accounts
- • Shares and investments
- • Personal belongings
- • Business assets (usually)
- • Subject to legal rights
- • Land and buildings
- • Property fixtures
- • Mineral rights
- • Long leases
- • Can be freely disposed of by will
Allowances and Reliefs Apply UK-Wide
Nil rate band, Residence Nil Rate Band (RNRB) and standard reliefs (spouse/charity, business/agricultural where relevant) apply in Scotland on the same terms as elsewhere in the UK. For example, RNRB criteria (direct descendants, qualifying home, and taper rules) are identical.
Tax Planning Implications
The interaction between legal rights and inheritance tax planning requires careful consideration. Legal rights cannot be defeated by will provisions, but they can be renounced during lifetime or after death.
Asset Restructuring
Converting moveable assets to heritable property can reduce the impact of legal rights while maintaining inheritance tax efficiency.
Lifetime Gifts
Gifting moveable assets during lifetime removes them from legal rights calculations and can reduce inheritance tax if survival periods are met.
Renunciation Agreements
Family members can agree to renounce legal rights, allowing more flexible estate planning while potentially optimizing tax outcomes.
Confirmation vs Probate
While the inheritance tax obligations remain the same throughout the UK, the procedures and timescales for estate administration differ in Scotland.
Joint Property Ownership
Scottish property law recognizes different forms of joint ownership that can affect inheritance tax planning. The most common forms are joint ownership with survivorship and tenancy in common.
Joint Ownership with Survivorship
Property automatically passes to surviving owner. Similar to joint tenancy in England. Can provide inheritance tax advantages for married couples.
Tenancy in Common
Each owner has a distinct share that forms part of their estate. Allows more flexible estate planning but requires careful inheritance tax consideration.
- Confirmation (not probate)
- Executor-nominate / executor-dative
- Heritable (land/buildings) vs moveable estate
- Legal rights (spouse/children's claims on moveables)
Professional Advice Essential
The interaction between UK inheritance tax rules and Scottish succession law creates complexity that requires specialist knowledge. Professional advice from solicitors familiar with Scottish law is essential for effective estate planning.