UK tax on foreign inheritance

usernameusername

Say somebody domiciled in the UK is due to receive inheritance from somebody domiciled outside of the UK. We have no double-taxation convention with this country. The tax thresholds of the country mean that the recipient is exempt from inheritance tax there.

My questions are:

• If the value actually received by this individual is below the UK nil-rate band, does it matter that the total foreign estate originally exceeded it, before being split between multiple children (only the one of whom is domiciled in the UK)? In other words, will this one individual have to personally pay "everybody's share", at 40% of the excess of £500k, simply because they have moved to the UK?
• Assuming that the above is true, is there any reduction that can be made in UK unilateral relief? (No tax can be proven as paid abroad, as none is due)

Thank you!

[Deleted User]

Can’t think of any reason why you would pay any tax on an inheritance from abroad.

macman

The recipient doesn't pay the IHT: the estate does. There is no UK tax on legacies received within or from outside the UK.
The only concern is what taxes may be due in the country of origin on the estate, and, since you don't state the country, I don't think anyone can tell you any more.

usernameusername

Thanks for the advice so far. The confusion underlying this question was caused by the fact that the other country does in fact tax inheritance from abroad.

The new question then is, how can foreign inheritance be registered/recognised as such, so that the large sum arriving in a UK bank account doesn't get flagged-up as taxable or fraudulent? Should an IHT400 with IHT401 be filled-in for the deceased, who never lived in the UK at all?

[Deleted User]

usernameusername said:

Thanks for the advice so far. The confusion underlying this question was caused by the fact that the other country does in fact tax inheritance from abroad.

The new question then is, how can foreign inheritance be registered/recognised as such, so that the large sum arriving in a UK bank account doesn't get flagged-up as taxable or fraudulent? Should an IHT400 with IHT401 be filled-in for the deceased, who never lived in the UK at all?

Again - why? An IHT400 is a U.K. form - the deceased is not a U.K. resident. All you need is evidence that it was an inheritance. It wasn’t Ireland by any chance?

I think that you are worrying needlessly.