UK Tax implications of Inheritence from NZ

Dinnie_2

I wonder whether anyone can clarify the tax situation. To summarise:

My father and his siblings are beneficiaries of their elder brother's estate. The deceased elder brother was New Zealand citizen. Probate is about to be granted and funds released by Public Trust NZ who are administering the estate.

As regards Tax liabilities, my father has been told:

• Any NZ State taxes will be paid by Public Trust NZ and a certificate showing tax paid will be issued to each beneficiary.
• The certificates are credits against each of the beneficiaries UK tax liability
• This benefit is classed as income, not inheritance or capital gains
• Each beneficiary would complete a normal tax return and pay tax on the balance after allowances and any credits, at the standard tax rate

He has obtained this information from a conversation with a UK tax official.

I understand the deduction of any State NZ taxes at source by the Public trust NZ before distribution of the estate to the beneficiaries. I had thought NZ had abolished Inheritance Tax but probably some other 'death taxes' are due and it is reasonable to suppose they would be deducted in NZ.

I am however lost on the UK tax liability implications and in particular the reference to 'income tax'. Are taxes due from the estate both at source in NZ and again in UK?

Is anyone able to explain how this works for me?

Dinah

Cook_County

Broadly speaking - assuming no trust is involved - for UK purposes the inheritance is UK tax-free.

There may still be tax on income or gains arising during the administration period or currency gains on the inheritance.