Hundreds of thousands of Britons who own property in France will benefit from sweeping reforms to the French tax system introduced by newly elected President Nicolas Sarkozy.

The reforms, which have been introduced with immediate effect, scrap inheritance tax (IHT) for all but the richest households, introducing a husband-and-wife exemption for the first time. At a stroke it ensures that up to 95 per cent of French property owners will not be troubled by death duties.

The threshold for the hated wealth tax, to which you are liable even if you do not live permanently in France, has changed, removing large numbers from the obligation to pay.

Homeowners are also being offered tax relief on their mortgage repayments although only expats who are permanent residents in France will be able to benefit.

Edward Reed, of the law firm Macfar-lanes, said: “The radical reforms have been introduced to boost the economy and increase spending power. However, it will also help UK owners of French holiday homes and expats.”

Nearly 500,000 Britons are estimated to own second homes in France, and more than 100,000 have made it their full-time home.

Its appeal shows no signs of diminishing as property remains cheaper than in the UK, accessible and relatively easy to rent. However, the country’s IHT system has long been a problem for British property owners.

Unlike in the UK, French assets left to a husband or wife have, until now, been liable to death duties.

There have been ways around it. A property passed between a husband and wife becomes exempt if it is held in joint names and the couple have signed a community marriage contract.

Many Britons haven’t realised this until it is too late and have faced hefty bills when their spouses died. Sarkozy’s changes mean that IHT will not apply to assets left to a husband or wife, mirroring the position in the UK.

The IHT-free allowance for each child who inherits has been tripled from €50,000 (£34,000) to €150,000. For nephews and nieces the new threshold will be €7,500, while for brothers and sisters it rises from €5,000 to €15,000.

Marjorie Mansfield at Siddalls, a financial adviser specialising in overseas property, said: “IHT in France used to catch Brits out but for many there is no longer anything to worry about.”

Although this is welcome, you must not forget that British inheritance tax applies to your worldwide assets for as long as you remain domiciled in the UK.

French succession laws remain unchanged. Unless you take steps to avoid them, your children will have more claim to your estate than your surviving spouse.

Britons who retire early to France have also been warned that they face thousands of pounds in extra insurance premiums because the government has withdrawn the right to a 70 per cent refund on health costs. The law change will hit those who have lived in France for more than two years without working and have not reached the UK retirement age.

However, Britons can benefit from changes to the unpopular wealth tax. It applies to the value of French assets worth more than €760,000 held by a nonFrench resident. French residents pay it on their worldwide assets and the rates range from 0.55 per cent to 1.8 per cent.

At present you pay tax on an amount equal to 80 per cent of the market value of your assets – so if you owned a property that was worth €1m, it would be valued at €800,000 and you would pay tax on €40,000. Now, the tax will be paid on 70 per cent of the value, or €700,000 in the example above, so a €1m property owner will pay nothing.

The French government has proposed tax relief on mortgage repayments in an effort to encourage more French people to own their own home.

Some British expats who live in France will be able to make a claim, but there are restrictions. The relief is limited to your primary residence and applies to any mortgage taken out since May 16 this year. It will apply only during the first five years of the loan.