Receiving inheritance from USA as a UK resident

Just been notified that you’re due to receive an inheritance from abroad? This can be a confusing time and you’re likely to have mixed emotions. After all, a relative has sadly passed away, but at the same time, you’ve received the good news of a financial windfall.

There are also practical matters to consider. How will you actually receive the inheritance, and are there any tax implications?

In this guide, we’ll be answering these questions and more - focusing specifically on receiving inheritance from the USA as a UK resident.

So if an inheritance from the US is coming your way, read on. We’ll run through any US-specific rules, procedures and inheritance taxes you need to know about, plus potential pitfalls to avoid.

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 the USA have an inheritance tax?

The US doesn’t have any direct federal (national) inheritance taxes, but it does have something known as estate tax. This is where the estate of the deceased person is taxed by the Internal Revenue Service (IRS) before inheritances are distributed to beneficiaries.

This means that if a person inherits something from a deceased relative, they don’t have to pay an inheritance tax.¹

There are a handful of US states that do have their own inheritance and estate taxes. But in most cases, it works the same as federal estate taxes - where the estate is taxed, not the beneficiaries.

So when you receive money from an inheritance, it should be the case that it has already had tax deducted from it.

Do UK residents pay tax on inheritance from the USA?

Whether inheritance tax laws apply in the UK or in the USA 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 the USA, tax will be deducted in the USA before you receive your inheritance and UK inheritance tax laws shouldn’t apply.²

But if your relative in the USA was actually UK domiciled and only lived in the USA 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.¹ This is an agreement between the UK and the USA to prevent citizens from being taxed twice on the same income or assets.

If you’ve inherited property (i.e. a house), it works a little differently. You may have to pay capital gains tax in the US if and when you sell it.¹

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 the USA 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 legal representatives for the deceased person or the executor of the estate over in the United States. 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. Be ready to 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, whether or not you think you’ll need to pay UK inheritance tax. You may need to complete form IHT207 if the deceased person was domiciled in the USA, or form IHT400 if the person was domiciled in the UK or who had UK assets.³ 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 some tips on how to deal with each:

• 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 the USA 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 USD.
• 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 and tax-efficient way to manage it.

Receiving an inheritance from the USA? Use Wise

After reading this guide, you should have an idea of what you can expect when receiving an inheritance from the USA. 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 the USA for free, using account details in USD. 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 USD 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 the USA in UK

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

How do I transfer inheritance from the USA to the UK?

You have a couple of different options for receiving inheritance money from overseas. You can either use your UK bank account, or use an account with a money transfer service such as Wise. The latter could be more cost-effective, as it could help you avoid high transfer fees and poor exchange rates.

How do I claim my inheritance in the USA?

If you haven’t been contacted about an overseas inheritance, but you think you are named as a beneficiary in a deceased person’s will, you may need to make the first move.

The first crucial step is to track down the executor of the estate, either through information from family members or by contacting the authorities in the US state the person lived in.

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 the USA. This is because the two countries have a double taxation treaty in place.¹ 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 the USA?

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 US does have gift taxes, but the person giving the gift usually pays these.⁴

Sources used:

Sources last checked on date: 20-Mar-2025