Valencia's 99% Inheritance Tax Bonus — and the UK Trap British Families Keep Missing (2026)

The two numbers every British owner on the Costa Blanca must know

If you own property in the Valencia Region and you are British, two numbers define your family's inheritance position: 99 % and 40 %.

• 99 % is the [inheritance tax rebate](/en/blog/inheritance-tax-spain-2026-complete-guide-rates-reductions-examples) the Valencia Region now grants to children, parents and spouses. A daughter inheriting a €300,000 estate here does not pay €31,000 in Spanish inheritance tax. She pays around €316.
• 40 % is what HMRC may still charge on that same asset under UK Inheritance Tax (IHT).

Below, what each rebate actually does, the mistake that throws the Spanish saving away, and why the two systems must be planned together.

What the 99 % bonus actually does

A common misconception is that the 99 % is "a discount on the value of the estate". It is not. The relief applies to the tax bill itself, and only after the standard allowances have been deducted. The order, for a child inheriting €300,000 in the Comunidad Valenciana, looks like this:

| Step | Amount |
| --- | --- |
| Estate value | 300,000 € |
| Standard child allowance (Group II) | -100,000 € |
| Taxable amount | 200,000 € |
| Spanish ISD calculated (state scale) | ≈ 31,600 € |
| 99 % Valencia rebate | -31,300 € |
| Tax actually payable | ≈ 316 € |

The relief comes from Valencia's regional inheritance tax law, strengthened by the 2023 reform that raised the rebate for close family members (Group I and II — children, parents, spouses) to 99 %. For most British families with a Costa Blanca holiday home or retirement property, it turns what used to be a feared tax into a near-formality.

You can model your own number in our [Spanish Inheritance Tax calculator](/en/tools/inheritance-tax) and contrast it with the [purchase-costs calculator](/en/tools/purchase-costs) to see acquisition and succession costs side by side.

The mistake that throws the saving away

The rebate is not automatic. When the deceased was non-resident — as most British owners are — the heir must formally elect to apply Valencia's regional rules in the Spanish ISD return, on the basis that the Spanish asset is located in the region.

This right exists thanks to European Court of Justice case law (judgment of 3 September 2014, C-127/12) and the Spanish Supreme Court doctrine extending the same treatment to non-EU residents — including UK heirs after Brexit (STS 242/2018 and following). But the law gives you the option; it does not apply it for you. File the return under the default national rules instead of the regional ones, and the 99 % rebate simply does not appear. The bill can jump from a few hundred euros to tens of thousands.