Australia charges no inheritance tax and no death duty anywhere in the country. Britain charges 40% above £325,000, or above £500,000 where the residence allowance applies. British inheritance tax now follows long term residence, and the reach ends three to ten tax years after departure. Capital gains tax reaches an Australian estate only when a beneficiary sells, and the family home is generally exempt across two hectares. Superannuation left to an adult child is taxed at 15% or 30% on the taxable component, which planning can reduce. Lifetime gifts are free of duty in Australia, where Britain applies a seven year rule.

Inheritance Tax in Australia: What Your Family Pays

Does Australia charge inheritance tax?

Every state and territory in Australia is free of death duty, and the federal government charges none either. An estate passes to the family with no tax on the transfer itself.

A beneficiary who receives money, property or jewellery declares nothing on it.
The position is the same in every jurisdiction, so moving state changes nothing.
Tax still reaches an estate in other ways, and the sections below set out exactly where.

How much would the same estate pay in Britain?

British inheritance tax takes 40p in the pound on everything above the threshold.

The threshold stands at £325,000.
It reaches £500,000 where a home passes to children or grandchildren and the residence allowance applies.
A married couple or civil partners can pass any unused threshold to the survivor.
The rate falls to 36% where a tenth or more of the net estate goes to charity.

An Australian estate of the same size passes whole.

How long does British inheritance tax follow you after you leave?

Britain now measures the reach of inheritance tax by residence rather than by domicile. A person counts as a long term UK resident once they have been UK tax resident for ten of the previous twenty tax years, and while that status holds their worldwide estate sits inside the charge, Australian assets included.

Once someone leaves, the status runs on for a set number of tax years:

Resident for thirteen years or fewer out of twenty, three tax years.
Fourteen years, four tax years.
Fifteen years, five tax years.
Each further year adds one more, reaching ten tax years for a full twenty.

Leaving Britain therefore settles the question in time. The domicile test it replaced could follow a family for a lifetime.

What happens to a British pension left to the family?

A legislated reform brings unused pension funds and pension death benefits into the estate for inheritance tax, and moves the reporting and payment onto the personal representatives rather than the pension scheme.

Around 10,500 estates a year are drawn into the charge that would otherwise stay outside it.
The average additional bill on those estates runs to about £34,000.
Death in service benefits from a registered scheme stay outside the charge.
Death benefits passing to a spouse, a civil partner or a registered charity keep their exemption.

Where a pension is transferred into a qualifying Australian scheme, the fund leaves the British pension regime. Whether it also leaves the inheritance tax net turns on the residence test above.

Which taxes still reach an Australian estate?

Capital gains tax is the one to plan for, and it falls on the beneficiary rather than on the estate.

An inherited asset generally carries the original owner’s cost base, so the gain measured on a later sale runs from what the deceased paid.
Assets the deceased acquired before capital gains tax began take their market value at the date of death instead.
The charge arises when the beneficiary sells, and only then.
An individual who has held an asset longer than twelve months reduces the gain by half.
Income the estate earns while it is being administered is returned through a trust return.

How is the family home treated?

The main residence exemption keeps the family home clear of capital gains tax, and it covers far more ground than the British equivalent.

The exemption reaches up to two hectares, counting the land under the dwelling.
British private residence relief applies automatically to grounds under 5,000 square metres, a quarter of the Australian area.
An inherited dwelling sold within two years of the death is fully exempt, whether the beneficiary lived in it or let it during that time.
The exemption also holds where the home remains the main residence of the spouse, of a person entitled to occupy it under the will, or of the beneficiary.

What tax falls on superannuation left to your children?

Superannuation follows its own rules and sits outside the will unless it is directed into the estate.

A lump sum paid to a death benefits dependant is free of tax in full.
A spouse, a de facto partner, a former spouse, a child under eighteen, a financial dependant and a person in an interdependency relationship all count as dependants.
A lump sum paid to anyone else, an adult child included, is taxed at 15% on the taxed element of the taxable component and 30% on any untaxed element, with the Medicare levy on top.
The tax free component passes to any beneficiary without charge.

Drawing superannuation down, or recontributing it, is the usual way families reduce that exposure. Both call for advice before death rather than after it.

Can you give assets away during your lifetime?

Australia charges no gift duty, and there is no cap on what one person may give another.

The person receiving a gift declares nothing on it.
Income the gift later earns, such as rent or interest, is taxable in the recipient’s hands.
Gifting an asset rather than cash can bring capital gains tax on the giver, worked out on market value at the time of the gift.

Britain runs the other way. A gift falls back into the estate where death follows within seven years, with the charge tapering from 32% down to 8% across the third to the seventh year, and only £3,000 a year plus £250 to any one person escapes automatically.

Do you need an Australian will as well as a British one?

Assets on both sides of the world are best covered by a will in each jurisdiction, drafted so that one does not revoke the other.

Australian law gives full testamentary freedom, so you choose who inherits and in what shares.
A separate Australian will covering Australian assets shortens the administration and lowers the cost for the family.
The revocation clause in each will has to be limited to that country’s assets, which is where wills drafted in isolation go wrong.
Superannuation passes under a binding death benefit nomination rather than under the will, so the two need to agree.

Who inherits when there is no will?

Intestacy rules take over, and they follow a fixed order rather than your intentions.

The spouse or de facto partner ranks first, and in many cases takes the whole estate.
Children share where there is no surviving partner, or where children come from an earlier relationship.
Parents, siblings and wider family follow in a set sequence after that.
The order is set by each state and territory, so the same family can face different outcomes depending on where the assets sit.

How is an Australian estate administered?

The executor named in the will collects the assets, settles the debts and distributes what remains.

A grant of probate validates the will and confirms the executor’s authority.
An English grant of probate can be resealed in Australia to deal with Australian assets, which saves running a second full application.
Assets are gathered, outstanding debts and tax are paid, and the balance passes to the beneficiaries.
A power of attorney granted to an Australian lawyer lets the work proceed while the family stays in Britain.

In short

Australia charges no inheritance tax and no death duty anywhere in the country.
Britain charges 40% above £325,000, or above £500,000 where the residence allowance applies.
British inheritance tax now follows long term residence, and the reach ends three to ten tax years after departure.
Capital gains tax reaches an Australian estate only when a beneficiary sells, and the family home is generally exempt across two hectares.
Superannuation left to an adult child is taxed at 15% or 30% on the taxable component, which planning can reduce.
Lifetime gifts are free of duty in Australia, where Britain applies a seven year rule.

Did You Know?

Comparing life in Australia to the United Kingdom.

Inheritance Tax, Side By Side

Australia charges no inheritance tax at all, in any state or territory. Both positions are published by the tax authority in each country.

Measure	Australia	United Kingdom
Tax rate on an estate passed to family	Nil	40% above the threshold
Value that can pass before any inheritance tax	The whole estate	£325,000, or £500,000 with the residence allowance
Death duties in any state or territory	None	Applies across the United Kingdom

Sources: Australian Taxation Office; GOV.UK Australian source

Retirement Savings Passed To The Next Generation

Australia leaves a retirement pot outside the estate, where Britain is drawing one in. Both positions are published by the tax authority in each country.

Measure	Australia	United Kingdom
Tax charged on retirement savings left to an adult child	15% on the taxed part	40% inheritance tax once pensions sit inside the estate
Estates newly drawn into a pension death charge each year	None	About 10,500
Average extra bill on the estates affected	None	About £34,000

Sources: Australian Taxation Office; GOV.UK British source

Giving While You Are Alive

Australia charges nothing on a lifetime gift, where Britain rations the amount and counts the years. Both positions are published by the tax authority in each country.

Measure	Australia	United Kingdom
Duty charged on a lifetime gift	None	The gift returns to the estate where death follows within seven years
Amount that can be given each year with no conditions attached	Unlimited	£3,000
Small gifts allowed to any one person each year	Unlimited	£250

Sources: Australian Taxation Office; GOV.UK British source