Receiving inheritance from Canada as a UK resident

If a relative in another country has passed away and left you money or property, you’ll need to know the procedure for receiving your inheritance.

This can be a confusing and sometimes difficult time - as a loved one has passed away, but you’ve also received the good news of a financial windfall. So in the midst of this, it’s important to know what to do and what advice to seek.

In this guide, we’ll be focusing on receiving inheritance from Canada as a UK resident. We’ll run through any Canada-specific rules, procedures and inheritance taxes, along with potential pitfalls to avoid. This should help the process of receiving your inheritance run smoothly.

We’ll also touch on a cost-effective way to receive inheritance funds from overseas here in the UK, with the Wise account.

Learn more about the Wise account

Does Canada have an inheritance tax?

Canada doesn’t have a direct inheritance tax, as such. If a person inherits something from a deceased relative, they don’t have to pay an inheritance tax or declare the sum on their tax return.¹

However, the Canada Revenue Agency (CRA) does tax the estate before inheritances are distributed to beneficiaries. Essentially, it is the deceased person and the estate which is taxed.¹

So when you receive money from an inheritance, it has already had tax deducted from it.

Do UK residents pay tax on inheritance from Canada?

Whether inheritance tax laws apply in the UK or in Canada depends on where the deceased person was domiciled. This means which country they were considered a permanent resident in for tax purposes.

If your relative was domiciled in Canada, tax will be deducted in Canada before you receive your inheritance and UK inheritance tax laws shouldn’t apply.²

But if your relative in Canada was actually UK domiciled and only lived in Canada for part of the time, UK inheritance tax laws may apply.²

This may mean there is a chance that the estate may be taxed twice (once in each country) and you’ll need to apply for tax relief through a double taxation treaty.³ This is an agreement between the UK and Canada to prevent citizens from being taxed twice on the same income or assets.

Tax can be complicated, and it becomes even more complex when more than one country is involved. If you’re a UK citizen and receive an inheritance from overseas, it’s strongly recommended that you seek professional tax and/or financial advice.

How to receive an inheritance from Canada in the UK

Now, let’s look at how you’ll actually receive your inheritance here in the UK. The following is a quick outline of the process:

1. Communicate with the deceased person’s or their executor’s legal representatives in Canada. They should contact you with details of the inheritance and arrange for you to receive it.
2. Seek tax/financial advice. This isn’t mandatory, but it could help you to understand your tax obligations.
3. Provide details of a UK bank or other account. This is where the funds will be paid.
4. Inform HM Revenue & Customs of the inheritance. You may need to complete form IHT207 if the deceased person was domiciled in Canada, or form IHT400 if the person was domiciled in the UK or who had UK assets.⁴ You may also need to apply for an Inheritance Tax reference number online, before you can complete these forms.
5. Appoint a solicitor or other specialist representative to apply for double tax relief, if you believe tax has been paid twice on the same funds or assets.

Potential issues and how to avoid them

Unfortunately, matters to do with inheritances, probate and taxes don’t always run smoothly. It can be especially complicated when the deceased person has beneficiaries or financial interests spread across different countries.

This means that issues and delays can potentially arise. Here are just a handful, along with how to deal with each, so you know what to prepare for:

• Double taxation - this can happen if the deceased person has assets in the UK (as part of a global estate) or was UK domiciled. The estate in Canada may already be taxed there, but it could also be taxed under UK inheritance tax laws. A solicitor or inheritance tax specialist can help you apply for double tax relief if eligible.
• Losing money to poor exchange rates and high transfer fees. You need to put some thought into how you’ll actually receive inheritance funds from overseas, so that money isn’t lost unnecessarily due to high transfer fees and poor exchange rates between GBP and CAD.
• Failing to plan ahead. What will you do with the funds once they arrive? If it’s a large sum, you may need to consult a financial advisor to plan out the most cost-effective way to manage it.

Receiving an inheritance from Canada? Use Wise

After reading this guide, you should have an idea of what you can expect when receiving an inheritance from Canada. Although you likely won’t pay inheritance taxes in the UK, it’s best to consult a financial or legal advisor to make sure you fully understand your obligations.

And for actually receiving and managing your foreign inheritance, you can rely on the Wise account from the money services provider Wise. It’s not a bank account, but it offers many similar features.

With Wise, you can receive money from Canada for free, using account details in CAD. You’ll only pay a low, transparent fee* to convert it to GBP, which will be done at the mid-market exchange rate with no markup added.

Or if you prefer, you can use your CAD balance to send money all over the world, tracking your transfer at every step and getting dedicated support from Wise’s team of experts if needed.

FAQs about receiving inheritance from Canada in UK

Here are some of the most commonly asked questions about receiving inheritance from Canada in the UK:

Do I have to pay inheritance tax in two countries?

No, you shouldn’t have to pay inheritance tax twice, in both the UK and Canada. This is because the two countries have a double taxation treaty in place.³ In some circumstances, you may be able to apply for tax relief if an inheritance is taxed twice. You’ll need to consult an inheritance tax specialist for advice.

How much money can I receive as a gift from Canada?

You shouldn’t have to pay tax on cash gifts in the UK, unless the gift generates an income. For example, if you earn interest on it in your UK bank account. In this case, income tax would be due if the interest exceeds your annual tax-free allowance.

But you’ll need to check whether the country you’re receiving the money from has its own rules and/or taxes on cash gifts. The good news is that Canada doesn’t have gift taxes.⁵

When did Canada abolish inheritance tax?

Canada dropped what was known as the ‘death duty rate’ to 0% in 1971, effectively abolishing inheritance taxes in the country.⁶ However, estates of deceased people are still subject to income and/or capital gains taxes.

Sources used:

Sources last checked on date: 20-Mar-2025