Inheritance tax rules with parents living abroad (Zimbabwe)

lizzie201296

Hoping it's OK to post this here, not sure if it's the right forum - but hopefully someone here has some insights! I have also asked this question on the HMRC forum but not sure I'll get any response there!

I was born in Zimbabwe but am a British passport holder, citizen, resident, living in the UK for 4 years and paying tax in the UK (only). My parents are British passport holders and citizens BUT were both born in Zimbabwe and have never lived in the UK, worked or paid tax in the UK. They don't own any property or have any assets in the UK. They do however have some money in an Isle of Man based 'international bank account' with Barclays which Barclays has told them is  closing (due to them closing international accounts for anyone not resident in the UK unless they deposit £100k).

My question therefore is twofold:
 - If they send that money (over £50,000) to my UK bank account now (ie. before they die), am I correct that the only tax I will have to pay on it will be tax on interest earnt once it is in my account? Do they need to provide any evidence/letter etc that it's a gift so the bank doesn't think I'm doing anything dodgy?
 - When my parents die, will I be liable for inheritance tax on this and any other money I receive from their estate in Zimbabwe or will they only be subject to Zimbabwean inheritance tax rules? Essentially asking whether UK inheritance tax rules apply to a) money coming from their Isle of Man based international bank account and b) money coming from their accounts/assets in Zimbabwe?

Some background - the money in the Isle of Man is just sitting there; they don't need it back in Zim and they don't really want to put it into a Zim account (not the best banking system..!) so they would like to just give it to me now. I may need to do the odd transfer every now and then back to them if they need a bit of cash, but otherwise they don't need or want access to it. Other than their house in Zim, they don't really have any other major assets out there (no huge savings etc).

Hope that makes sense! I don't want to be accidentally hit with a massive tax bill or flagged as some sort of money launderer!

xylophone

https://taxsummaries.pwc.com/zimbabwe/individual/other-taxes#:~:text=Inheritance, estate, and gift taxes,and certain life insurance policies.


Your parents are tax resident and ordinarily resident in Zimbabwe so it will be Zimbabwean laws which apply to tax on assets/income/estate etc.

If your parents make you a gift then the cash is yours to do with as you please.

If you deposit the gift in your account (s) and earn interest the UK law will apply.

https://www.gov.uk/apply-tax-free-interest-on-savings#:~:text=You pay tax on any,you pay the tax automatically.

Your parents' money has been in their Barclays International account for some while it seems but Barclays have now decided to close accounts which no longer meet their criteria.

Your parents can instruct Barclays International to transfer all the cash to your UK bank account.

I am wondering whether it would be to your advantage to open a standard current account with Barclays?

The audit trail would be clear and even if Barclays  put a temporary block on the account for money laundering checks, it would not impede your normal banking.

Albermarle

Hope that makes sense! I don't want to be accidentally hit with a massive tax bill or flagged as some sort of money launderer!

There is always the possibility for anybody that if a large amount suddenly appears in your bank account, the bank may investigate its source due to money laundering issues. The fact that it is coming from a foreign owner ( your parents) via an offshore account may raise extra concerns.
So you may have to supply info/ evidence of its source to get the money released.