Receiving an Inheritance Abroad: Tax, Reporting and Investment Planning

Inheriting wealth from a relative abroad — or being a UK-based beneficiary receiving assets from a foreign estate — creates a set of financial planning challenges that many people are ill-prepared for. The combination of potential tax obligations in multiple countries, reporting requirements, currency considerations, and the need to integrate the inheritance into an existing financial plan means that professional advice should be sought early.

This guide explains the key tax and reporting obligations for individuals receiving an inheritance from abroad as of 2026, and sets out how to invest the proceeds thoughtfully.

Past performance is not a reliable guide to future returns. Tax rules are complex and subject to change. Nothing in this article constitutes advice specific to your circumstances.

Does the UK Tax Inheritances You Receive?

This is the most common question — and the answer is reassuring for most recipients.

In the UK, inheritance tax (IHT) is paid by the estate of the deceased, not by the beneficiary. There is no separate "beneficiary's tax" on amounts received. If you inherit £500,000 from your aunt in France, you are not personally liable for UK IHT on that sum — the estate (if subject to UK IHT) would have paid tax before the distribution.

However, this does not mean inheriting from abroad is tax-free in all respects:

Income tax on inherited assets. You will pay UK income tax on income generated by inherited assets going forward. If you inherit a French property and collect rental income, that income is taxable in the UK (subject to any double tax treaty credit for French taxes paid).

Capital gains tax. When you sell inherited assets, you will normally be liable for UK CGT on gains arising after the date of inheritance (your base cost is typically the value at date of death). For foreign assets, gains may also be taxable in the source country — double tax relief may apply.

The source country's taxes. Inheritance taxes, estate duties, or succession taxes may be levied in the country of the deceased's estate. France has complex succession duties (droits de succession) payable by beneficiaries. The US estate tax applies on US-sited assets. Spain, Germany, and many other countries also levy inheritance taxes on beneficiaries. These are separate from UK IHT and must be dealt with in those countries.

HMRC Reporting Obligations

UK residents receiving an inheritance from abroad do not routinely need to report the capital inheritance itself to HMRC — it is not income. However, several scenarios do create reporting obligations:

Foreign income. If you start receiving income from inherited foreign assets — dividends, rent, interest — this must be reported on your UK self-assessment return (if you file one).

Capital gains. Gains on disposal of inherited foreign assets must be reported. As of 2026, UK residents must report any gain within 60 days if the asset is UK property; for non-UK assets, reporting on the annual self-assessment return applies.

Foreign bank accounts. If you become the holder of an inherited foreign bank account, any income it generates (such as interest) is reportable, and the account itself is typically disclosed to HMRC automatically under the Common Reporting Standard.

Trust interests. Inheriting a beneficial interest in a foreign trust creates specific reporting obligations under HMRC's trust regime. Trust income received is generally taxable; the trust structure itself may trigger reporting requirements.

Remittance basis users. Non-UK domiciled individuals claiming the remittance basis of taxation have specific rules about when inherited foreign income and gains become taxable in the UK on remittance. These rules are complex and have changed significantly following the non-dom reform of April 2025.

Non-Dom Reform and Foreign Inheritances (as of 2026)

The non-dom regime was fundamentally reformed from April 2025. The remittance basis is no longer available to new arrivals in most circumstances; a new Foreign Income and Gains (FIG) regime applies for the first four years of UK tax residency instead.

For beneficiaries who are recent arrivals in the UK, the FIG regime may shelter foreign income from inherited assets during the first four years. Those who were long-term non-doms must now review their position carefully under transitional arrangements.

For established UK-domiciled residents, all foreign income and gains arising on inherited assets are taxable in full. The key planning issue is structuring the inherited assets efficiently going forward.

Double Taxation and Treaty Relief

If inheritance taxes have been paid in the source country, the UK has a small number of double taxation treaties covering estate/inheritance taxes (US, France, Netherlands, Sweden, South Africa, Switzerland, as of 2026). Under these treaties, credit for overseas taxes paid may be available against UK IHT on the same assets (if any UK IHT applies).

For income and gains on inherited assets, the UK has a much broader network of income tax and CGT double tax treaties — covering most significant jurisdictions. Relief is typically either:

• exemption: the income is taxable only in one country
• credit: the income is taxable in both, but a credit for overseas tax reduces the UK liability

Your UK tax return should reflect the correct treaty treatment. Incorrect handling — either failing to claim credit or incorrectly excluding income — is a common source of error in returns involving foreign estates.

Dealing With Foreign Property Inherited

Inheriting overseas property is often the most complex element of a foreign inheritance:

Administration. Foreign property requires local legal processes (see our bereavement planning article). You will need local legal representation to transfer title.

Valuation. You need a professional valuation at the date of inheritance to establish your base cost for CGT purposes. Do not skip this step — it is very difficult to reconstruct later.

Currency. If the property is valued in euros, US dollars, Thai baht, or another currency, currency movements affect the sterling value of both the asset and any eventual sale proceeds.

Running costs. Foreign property generates ongoing costs — local property taxes, maintenance, agent fees, insurance. These must be factored into any decision to retain or sell.

Rental income. If the property is rented out, the income will be taxable in both the source country and the UK (with treaty relief). Tax returns may be required in two countries.

Sale proceeds. When you sell, CGT may be due in the source country and (on the gain since inheritance) in the UK. Treaty relief may reduce the combined burden.

For non-UK property worth retaining as an investment, it may be worth holding through a company or trust structure — but this adds complexity and cost and requires professional analysis.

Inheriting Cash and Investments Abroad

Cash inheritances held in foreign bank accounts need to be either:

• transferred to the UK (triggering currency exchange)
• retained offshore within a compliant structure (if there is an ongoing reason to hold funds offshore)

The automatic reporting requirements under the Common Reporting Standard (CRS) mean that most foreign bank accounts held by UK residents are reported to HMRC automatically. There is nothing wrong with holding offshore accounts, but they must be properly declared.

Inheriting a foreign investment portfolio (stocks, bonds, funds) requires consideration of:

• whether the investments are suitable for your own portfolio and risk profile
• whether foreign funds may be classified as Passive Foreign Investment Companies (PFICs) for tax purposes if you have US tax exposure
• whether selling and reinvesting is more tax-efficient than retaining the portfolio
• the cost of managing assets in foreign custodians vs. consolidating with a UK or international platform

Investment Planning for an Inherited Lump Sum

Once the administrative and tax position is clear, the focus shifts to investment planning. Key principles:

Do not rush. An inheritance received in cash can sit in a high-interest deposit account for three to six months while you take proper advice and establish a plan.

Integrate the inheritance into your overall plan. An inherited lump sum is not a standalone portfolio — it is part of your overall financial position. The appropriate asset allocation depends on your total wealth, liabilities, time horizons, income needs, risk tolerance, and tax position.

Consider tax-efficient wrappers. Depending on your situation, invested funds might sit inside a SIPP (if you have earned income and pension allowance), an ISA (limited to £20,000 per year), an offshore bond (particularly useful for non-UK residents or those planning to return to the UK later), or a general investment account.

Review estate planning implications. An inherited windfall changes your own IHT exposure. Your will, trusts, and gifting strategy may need to be reviewed.

Currency management. If the inheritance is in foreign currency, establish a clear strategy for whether and when to convert to sterling.

Common Mistakes to Avoid

• Treating an inheritance as income and spending before tax obligations are understood
• Failing to obtain a professional valuation at the date of inheritance
• Neglecting to report foreign income arising from inherited assets
• Making large investment decisions immediately, in the emotional aftermath of bereavement
• Ignoring domicile and residency implications for ongoing tax treatment
• Not updating your own will and estate plan after receiving a significant inheritance

How Global Investments Can Help

Global Investments works with clients navigating the financial complexities of foreign inheritances, including tax and reporting obligations, investment planning, and estate plan updates. Our advisers have broad experience with multi-jurisdictional wealth and can refer clients to specialist tax and legal professionals in relevant overseas jurisdictions.

Services relevant to this situation include tax reporting support, investment planning for inherited lump sums, offshore bond and wrapper structuring, estate planning review, and currency management.

Speak with a Global Investments adviser for a confidential discussion about your inherited assets. Advice taken early — before making financial decisions — is invariably more effective than advice sought after problems have already arisen.

This article is for general information only and does not constitute tax or legal advice. Tax rules vary by jurisdiction and are subject to change. Always seek independent professional advice tailored to your circumstances.