Inheritance Tax in Poland and the UK: How to Avoid Being Taxed Twice
This guide is general legal information, not legal advice. How the rules apply depends on your individual circumstances, and the matter should be assessed by a qualified Polish lawyer (and, on the UK side, a UK tax adviser or solicitor). Twoja Sprawa helps you organise the documents for that assessment.
Your grandmother passes away and leaves you 1,000,000 PLN in Poland and £100,000 in the UK.
The first question is: how much tax will I actually pay?
The second, more uncomfortable one is: could I be taxed in both countries?
This guide explains how inheritance tax works in Poland and the UK, whether a double taxation treaty covers inheritance, and how families realistically reduce the damage.
Polish inheritance tax — the tax-group system (I/II/III)
In Poland, inheritance tax depends on how closely related you are to the deceased (Inheritance and Gift Tax Act of 28 July 1983).
Tax groups and rates
| Group | Who's included | Rate | Tax-free allowance |
|---|---|---|---|
| I | Spouse, children, parents | 3–7% | Up to 1.4m PLN per child/spouse |
| II | Siblings, grandparents, aunts, uncles | 14% | None |
| III | Everyone else (friends, unmarried partners) | 20% | None |
Worked examples
Scenario A: Child inherits from mother - Estate: 1,000,000 PLN - Group: I (child) - Allowance: 1,400,000 PLN - Tax: (1,000,000 − 0) × 3% = 30,000 PLN (the estate falls under the allowance, so the low rate applies to the full amount)
Scenario B: Child inherits a large estate - Estate: 2,000,000 PLN - Group: I (child) - Allowance: 1,400,000 PLN - Tax: (2,000,000 − 1,400,000) × 3% = 600,000 × 3% = 18,000 PLN
Scenario C: Brother inherits from brother - Estate: 500,000 PLN - Group: II (siblings) - Allowance: none - Tax: 500,000 × 14% = 70,000 PLN
Filing and deadline — urgent, 6 months!
- Form: SD-Z2 (available from a notariusz — a Polish civil-law notary, roughly equivalent to a UK conveyancing solicitor — or from the Ministry of Finance website)
- Deadline: Within 6 months of the "opening" of the succession (broadly, the date of death)
- Where to file: The tax office (Urząd Skarbowy) covering your place of residence or the location of the estate
- Penalty for missing the deadline: Interest plus a fine of up to 50% of the tax owed
UK Inheritance Tax — 40% above the nil-rate band ⚠
In the UK, inheritance tax is called Inheritance Tax (IHT) — and it is considerably heavier than the Polish equivalent.
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Nil-rate band (the tax-free threshold): - ⚠️ This figure can change — it currently stands at around £325,000, but always verify the up-to-date figure with a UK tax adviser or on GOV.UK - Below this threshold: 0% tax - Above this threshold: 40% tax
Worked examples
Scenario A: Small estate - UK estate: £200,000 - Nil-rate band: £325,000 - IHT due: £0 (the estate is below the nil-rate band)
Scenario B: Medium estate - UK estate: £500,000 - Nil-rate band: £325,000 - IHT due: (£500,000 − £325,000) × 40% = £175,000 × 40% = £70,000 (a serious sum)
Scenario C: Large estate - UK estate: £1,000,000 - Nil-rate band: £325,000 - IHT due: (£1,000,000 − £325,000) × 40% = £675,000 × 40% = £270,000 (very significant)
Spouse exemption
- Spouse: Full exemption (no limit) on assets passing to a spouse
- Civil partner: Full exemption
- Everyone else: No exemption (the rate can drop to 36% if at least 10% of the estate is left to charity)
Payment deadline
- Deadline: Usually 6 months after death (though HMRC can require earlier payment if assets are being sold)
- Process: HMRC (HM Revenue & Customs) sets the deadline; miss it, and interest starts accruing on the unpaid amount
Is there a PL–UK double taxation treaty for inheritance? ⚠
This is the key question, and the answer is, unfortunately, not straightforward.
The general PL–UK tax treaty
- ✅ It exists: a double taxation agreement between Poland and the UK (Dz.U. 2006 nr 250 poz. 1840, i.e. the Polish Journal of Laws)
- ⚠️ But: this treaty mainly covers income tax and VAT, and does not cover inheritance tax
What that means in practice
⚠️ There is no clear, formal double taxation treaty covering inheritance between Poland and the UK.
In practice this means: - Poland can issue you a tax bill (SD-Z2) - The UK can issue you an Inheritance Tax bill - Both may apply to the same estate at the same time
Can I offset one against the other?
In theory: - Poland allows a credit for tax already paid abroad (Article 4a of the inheritance and gift tax act), but this requires a specific application - The UK also has a relief mechanism (Foreign Tax Credit Relief), which likewise requires a formal claim
In practice: the procedures are genuinely complicated. It is worth taking advice from a tax adviser in both jurisdictions — Polish and UK.
Practical risks of double taxation
Scenario: 1,000,000 PLN estate + £100,000
Assets: - Property in Poland: 1,000,000 PLN - UK bank account: £100,000 (≈ 500,000 PLN) - Total: ~1,500,000 PLN / ~£225,000
Tax in Poland (Group I): - Allowance: 1,400,000 PLN - Tax: (1,500,000 − 1,400,000) × 3% = 100,000 × 3% = 3,000 PLN
Tax in the UK: - Nil-rate band: £325,000 (~1,600,000 PLN) - IHT due: £0 (the estate is below the nil-rate band) ← a lucky outcome
Total tax: ~3,000 PLN — manageable.
Scenario 2: A larger estate — 2,000,000 PLN + £150,000
Assets: - Property in Poland: 2,000,000 PLN - UK bank account: £150,000 (≈ 750,000 PLN) - Total: ~2,750,000 PLN / ~£225,000 combined value
Tax in Poland (Group I): - Allowance: 1,400,000 PLN - Tax: (2,750,000 − 1,400,000) × 3% = 1,350,000 × 3% = 40,500 PLN
Tax in the UK: - Nil-rate band: £325,000 - UK portion of estate: £150,000 - IHT due: £0 (£150,000 is below £325,000)
Total tax: ~40,500 PLN — reasonable.
Scenario 3: A very large estate — 3,000,000 PLN + £300,000
Assets: - Property in Poland: 3,000,000 PLN - UK bank account: £300,000 (≈ 1,500,000 PLN) - Total: ~4,500,000 PLN / ~£450,000 combined value
Tax in Poland (Group I): - Allowance: 1,400,000 PLN - Tax: (4,500,000 − 1,400,000) × 3% = 3,100,000 × 3% = 93,000 PLN
Tax in the UK: - Nil-rate band: £325,000 - UK portion of estate: £300,000 - IHT due: £0 (£300,000 is below £325,000)
Total tax: ~93,000 PLN — still contained.
Scenario 4: A worst case — 5,000,000 PLN + £500,000
Assets: - Property in Poland: 5,000,000 PLN - UK bank account: £500,000 (≈ 2,500,000 PLN) - Total: ~7,500,000 PLN / ~£750,000 combined value
Tax in Poland (Group I): - Allowance: 1,400,000 PLN - Tax: (7,500,000 − 1,400,000) × 3% = 6,100,000 × 3% = 183,000 PLN
Tax in the UK: - Nil-rate band: £325,000 - UK portion of estate: £500,000 - IHT due: (£500,000 − £325,000) × 40% = £175,000 × 40% = £70,000 (≈350,000 PLN)
Total tax: 183,000 PLN + ~350,000 PLN = ~533,000 PLN (roughly 7% of the whole estate)
How families try to reduce the exposure (legacy by vindication, life insurance, wills) ⚠
These are planning strategies, not tax advice as such. Always take advice from a lawyer and a tax adviser before acting on any of them.
1. Legacy by vindication (zapis windykacyjny, made via a notarial will)
The idea: Instead of ordinary inheritance (which is taxed), Polish law allows a zapis windykacyjny — a "legacy by vindication" set out in a notarial will (Articles 981¹–981⁶ of the Polish Civil Code).
A legacy by vindication transfers ownership of a specific asset directly to the named person, bypassing the general succession process.
⚠️ However: tax on a legacy by vindication is charged at exactly the same rates as ordinary inheritance tax. It changes the procedure, not the tax bill.
2. Life insurance with a named beneficiary
The idea: If you hold a life insurance policy with a named beneficiary, the payout: - Falls outside the estate - Is not normally subject to inheritance tax - Goes directly to the named beneficiary
In practice: if you know a large inheritance is coming, updating the named beneficiary on a policy (rather than leaving the payout to fall into the general estate) can let part of the money bypass inheritance tax.
⚠️ Caution: some policies can still be treated as part of the estate if no beneficiary is clearly named. Always check the policy terms with the insurance broker.
3. A clearly structured will
The idea: A clear notarial will that explicitly divides the estate between heirs reduces both disputes and the need for court proceedings.
Effect: a faster process, lower notarial and court costs, and less money lost to procedure rather than to the family.
4. Two separate wills (one for Poland, one for the UK)
If you hold assets in both countries, consider making two wills — one covering Polish assets, one covering UK assets.
Effect: each will deals only with the assets and jurisdiction it was drafted for, which reduces confusion and the risk of one country's formalities invalidating provisions meant for the other.
FAQ
Do I pay both UK IHT and Polish SD-Z2 tax on the same money?
⚠️ Potentially, yes — it depends on whether both countries grant relief for tax paid to the other (Foreign Tax Credit).
- Poland: allows a credit for IHT already paid abroad, if you file the right application
- UK: allows a credit for Polish tax already paid, if you claim Foreign Tax Credit Relief
In practice: you need to file claims in both countries. Skip the paperwork, and you risk paying twice.
What if my father lived in the UK but owned a house in Poland?
- House in Poland: taxed under Polish rules (3–7% for close family)
- UK bank account: taxed under UK Inheritance Tax rules (up to 40%)
- Combined effect: both taxes can apply to the same estate
If the Polish house is worth 1m PLN and the UK account holds £100,000 (~500k PLN), a close family member might end up paying roughly 3% on the combined value, since the family allowance covers most of it.
Where can I get tax help?
In Poland: - The tax office (Urząd Skarbowy) — free, but limited in what it can advise on - A tax adviser (doradca podatkowy) — roughly 500–1,000 PLN for a consultation - A law firm — roughly 1,000–3,000 PLN for handling the procedure
In the UK: - HMRC — free guidance online - A tax accountant or solicitor — roughly £100–300 for a consultation - A firm specialising in inheritance matters — roughly £500–2,000
Summary
| Country | Rate | Allowance | Deadline | Form |
|---|---|---|---|---|
| Poland (Group I) | 3–7% | Up to 1.4m PLN | 6 months | SD-Z2 |
| UK | 0–40% | £325,000 (nil-rate band) | 6 months | IHT return + HMRC |
Main risks: - ⚠️ Double taxation (no clear treaty covering inheritance) - ⚠️ High procedural costs in the UK - ⚠️ Tight deadlines (6 months in both countries)
How to reduce the exposure: - ✅ Two wills (one for Poland, one for the UK) - ✅ Relief applications (Foreign Tax Credit in both countries) - ✅ Advice from a tax adviser in both Poland and the UK - ✅ Life insurance policies with a named beneficiary (fall outside the estate)
Disclaimer: This material is for general information only and does not constitute tax or legal advice. Twoja Sprawa is an information and coordination platform, not a law firm. Each case should be assessed with the involvement of a tax adviser and a lawyer specialising in succession law and international taxation.