We’re here to help families protect what matters. In plain English, this guide shows why an estate can face tax bills in more than one country and what that looks like in practice.
HMRC can treat foreign real assets as part of a taxable estate. The standard UK rate is 40% above allowances, so that risk matters to many households.
From April 2025, long‑term residence rules change. That affects old domicile shortcuts and means some past assumptions no longer hold.
We will set out practical steps: treaty relief, foreign tax credits, careful valuation and clear reporting. We explain what works and what does not, so you avoid costly mistakes and delays.
Key Takeaways
- UK estate rules can include foreign assets, so plan early.
- Expect possible overlap with another country’s levy and use treaty relief where available.
- From April 2025, residence rule changes may alter planning options.
- Practical tools: credits, treaties, accurate valuations and clear reporting.
- Avoid “magic” offshore fixes; they often bring risk and cost.
Why double taxation happens when inheriting overseas property
We often see one asset attract claims from two different systems. A holiday home might be taxed where it sits and again where the deceased or beneficiary is treated as resident.
What this means in practice
One asset, two tax bills. Take a UK-based beneficiary who inherits a flat in Spain. Spanish law may assess an estate charge. HMRC may also include the same asset when it values the estate for inheritance tax.
Common triggers
- Asset location: the law where the home sits often has primary rights.
- Residence status: the deceased or beneficiary’s tax residence can create a second claim.
- Conflicting rules: different definitions of estate, reliefs and allowances.
Why it matters
These overlaps reduce what heirs receive. They can cause cashflow pressure if tax is due before a sale. That leads to rushed decisions and added costs.
“Relief is usually available, but only if you identify the correct taxing rights and keep the paperwork clean.”
| Trigger | Who may tax | Practical effect |
|---|---|---|
| Location of asset | State where the home sits | Local probate and a levy at death |
| Deceased/beneficiary residence | State of residence | Inclusion of worldwide assets in the estate |
| Conflicting rules | Both countries | Possible overlapping charges and admin delays |
We will show how treaty relief, credits and clear reporting can reduce these tax implications. Start early and check which country has first taxing rights. For more on agreements that help, see our guide: double taxation agreements.
How UK inheritance tax applies to foreign assets and overseas property
If you live in the UK, assets held elsewhere may still count toward your estate for tax.
Worldwide assets and IHT purposes for UK residents
HMRC can include worldwide assets when someone is a UK resident. That means foreign assets and foreign property may be valued and reported like UK holdings.
What this means day‑to‑day:
- Estate valuation will list global holdings under iht purposes.
- Local title, bank balances and shares abroad are counted.
- Even if a house never comes to Britain, it may still be subject iht.
When an overseas property is treated the same as UK property
For most practical steps, an overseas property is not special. HMRC applies the same valuation rules and forms. The tricky part is how foreign levies and local succession rules interact with UK rules.
| Situation | UK treatment | Practical effect |
|---|---|---|
| Resident dies owning foreign home | Included in estate (iht purposes) | Must value and report; possible UK charge |
| Non-resident test passes | May not be subject iht | Local probate may still apply |
| Foreign tax already charged | Credit or relief may be possible | Need evidence and careful claims |
“Residence is often the hinge that decides whether worldwide assets form part of the UK estate.”
For a practical guide on holiday homes and how foreign charges are treated, see inheritance tax on overseas holiday homes.
UK IHT thresholds and rates to know for current planning
Knowing the key thresholds helps you see if a single asset pushes an estate into chargeable territory.
Nil‑rate band
The nil-rate band is the first allowance that reduces an estate’s value for inheritance tax purposes. It currently stands at £325,000. That amount is deducted when we value estate assets.
Residence nil‑rate band
The residence nil-rate band is an extra allowance of £175,000 when a main residence passes to direct descendants. It does not apply automatically.
The residence nil-rate band generally only helps if the home is the deceased’s main residence and is left to children or grandchildren. A holiday home rarely qualifies unless it was the main home and is transferred correctly.
How the 40% rate and taxable estate work
We calculate the taxable estate by adding all assets, deducting debts and applying available bands. If the net estate exceeds the combined allowances, the excess faces the standard 40% rate.
Example: estate value £600,000. Subtract nil‑rate band £325,000 and RNRB £175,000 (if available). Taxable amount = £100,000. Tax at 40% = £40,000.
Practical cash point: tax is paid by the estate. If the main asset is a building abroad, executors may need liquidity to settle a bill before sale. That can force hurried decisions and reduce what heirs receive.
| Allowance | Amount | When it applies |
|---|---|---|
| Nil‑rate band | £325,000 | All estates; reduces value before any tax |
| Residence nil‑rate band | £175,000 | Main residence left to direct descendants (subject to conditions) |
| Standard rate above bands | 40% | Applied to the taxable estate once allowances are used |
Long-term residence rules since April 2025 and why they change everything
Since 6 April 2025 the main gateway into worldwide iht moved from domicile to long‑term residence. This matters for anyone with foreign assets and cross-border family ties.
What counts as a long‑term resident
A long‑term resident is a person who has been UK tax resident for at least 10 of the last 20 tax years. That test can catch many internationally mobile families.
The IHT “tail” after leaving the UK
Leaving the UK does not end exposure immediately. The IHT tail can last up to 10 years.
- 10–13 years’ residence → tail minimum 3 years.
- Each extra year of residence generally adds one year to the tail, up to 10 years total.
- The result is potential continued liability to iht on non‑UK assets while you settle abroad.
Where domicile still crops up
Old trusts and pre‑2025 plans may still use domicile rules. Treaties and some trust rules also refer to domicile, so check them in any estate planning review.
| Rule | Effect | Action |
|---|---|---|
| Long‑term residence | Worldwide iht exposure | Review timing of move and estate planning |
| IHT tail | 3–10 years of continued liability | Plan liquidity and asset transfers carefully |
| Domicile in older plans | May still affect trusts and treaties | Audit old arrangements and update documents |
“Moving abroad is not a simple switch — plan early and check old trusts.”
double taxation on inheritance for overseas property owners uk: who is most at risk
When assets span borders, the risk of parallel estate charges rises quickly. We focus on three groups who commonly feel the squeeze.
UK residents inheriting from a foreign estate
UK residents who inherit a foreign asset may face a local levy where the asset sits and a UK charge if worldwide assets count. That can create cashflow pressure if tax is due before the asset is sold.
Long‑term residents who still own foreign assets
People who meet the long‑term residence test but keep foreign homes or investments remain liable in multiple places. The new residence rules since April 2025 make this more common.
Families with assets across several countries
Each additional jurisdiction adds valuation work, local forms and possible probate steps. A UK house plus an Irish cottage and US investments is a recipe for extra delays and fees.
- Why one asset can be risky: local situs rules often give first taxing rights to the country where the asset sits.
- Early advice matters: treaty checks and local tax input can save time and money before you file UK IHT forms.
- Red flags: multiple wills, foreign mortgages, shared ownership and complex family ties.
“Spotting your risk profile early lets you pick the right relief path — treaty, credit or planning — and avoids rushed sales.”
If you need practical estate support, see our guide to estate planning for UK expats for tailored advice.
Work out which country can tax the inheritance first
Begin with the simple question: which jurisdiction will claim the estate first? We map taxing rights before any action. That helps avoid surprise bills and rushed sales.
Tax in the country where the property is located
The country where the country asset sits usually has first call. Local law often treats the building as subject tax overseas at death.
That means probate and a local levy may be due before a sale. Executors must know this to plan liquidity.
Tax in the UK based on residence status and worldwide assets
If the deceased was UK resident or a long‑term resident, HMRC may include worldwide assets when assessing IHT.
That can mean a second claim even if local tax has already been paid.
How dual connections create overlapping IHT liability
Dual connections arise when one state taxes the asset because it sits there and the UK taxes because of residence. The result is overlapping iht liability.
Why this matters: without clarity you may miss relief claims or face late‑payment interest.
- Which country has situs rights to the asset?
- Was the deceased a resident or long‑term resident at death?
- Is there local evidence of tax paid that supports a credit claim?
- Collect: death certificate, title deeds, residency records, local tax assessments.
“Map taxing rights first; it makes all other steps clearer.”
Use UK inheritance tax double taxation treaties to reduce or eliminate overlap
We start with a clear point: agreements decide who taxes first and how relief works. That can prevent two states each taking a full charge on the same asset.
What an agreement does in practice
Treaties can allocate taxing rights and set methods for relief. That means one country may yield priority or allow a credit so the total does not exceed a fair amount.
Countries to check early
- Ireland, USA and South Africa;
- France, Netherlands and Sweden;
- Switzerland, Italy, India and Pakistan.
How the cap works and practical steps
Cap concept: some accords ensure the combined charge cannot be higher than the larger of the two assessments.
Treaties are not automatic. Executors must claim relief, submit evidence and meet deadlines. Good estate planning flags these steps before death.
Deemed domicile and post‑April 2025 rules
From 6 April 2025 HMRC treats long‑term residents as deemed domiciled for treaty tests. That affects which agreements help and how claims succeed.
“Check treaties early and keep clear records to avoid costly delays.”
Claim credit or relief when foreign inheritance tax is also charged
If tax has been settled overseas, that payment can sometimes reduce what the estate owes here. We explain the simple credit route and the paperwork that gives it force.
When a foreign tax credit may apply
Where the same asset faces tax in two countries, executors may offset foreign tax against the UK charge if the rules allow. A treaty may set the method. If there is no treaty, a statutory credit can still apply in certain cases.
Evidence and paperwork you’ll need to support a claim
Claims succeed on clear documentary proof. Gather:
- official foreign tax assessments and receipts;
- formal valuations that match the reported value estate;
- certified translations where documents are not in English;
- proof of ownership, title deeds and probate papers;
- bank payment records showing tax settled abroad.
Common errors that delay relief and increase estate costs
Missing or inconsistent documents are the usual culprits. Executors often submit mismatching values between jurisdictions. Late submissions and unclear ownership records also slow things down.
| Problem | Why it matters | Fix |
|---|---|---|
| Inconsistent valuations | Reduces chance of full credit | Obtain coordinated valuations used in both jurisdictions |
| Missing payment evidence | HMRC will not allow credit without proof | Secure official receipts and bank traces |
| Late or incomplete forms | Interest, penalties and extended probate | File promptly and meet both sets of deadlines |
| Poor adviser coordination | Conflicting claims and lost relief | Use UK and local advisers who share documentation |
Our practical advice: get coordinated advice and keep a tidy file. That saves the estate both time and extra tax liability. For wider guidance on avoiding overlapping charges, see our guide on navigating inheritance tax on overseas property in the.
Handle valuations, currency, and reporting to HMRC correctly
Valuing foreign assets needs care. Executors must present a clear, UK‑style market value and show how they arrived at that figure.
Valuing overseas property and dealing with exchange rates
Obtain a local professional valuation dated at the date of death. Then convert that figure to pounds using the spot rate on the same date.
Why that matters: inconsistent conversion dates or use of mid‑market estimates can trigger HMRC queries.
Reporting foreign assets as part of the deceased estate
Include every non‑UK asset when you value estate totals. Match narrative and numbers with any local filings to avoid contradictions.
Keep copies: valuations, title deeds, tax receipts and translations. These documents support claims for credits or reliefs later.
Managing administration costs across jurisdictions
Budget for local fees: notaries, equivalent probate, registry charges, translations and specialist reports. These drain estate liquidity quickly.
- Plan cashflow: assess whether the estate needs short‑term funding to meet local charges.
- Coordinate advisers: appoint a UK lead who shares documents with local lawyers and valuers.
- Get organised checklist: dated valuation, certified translations, exchange rate evidence, payment receipts and probate papers.
“Clear valuations, consistent currency conversions and tidy paperwork cut delays and protect beneficiaries.”
Get the executor and beneficiary actions right on cross-border estates
Managing an estate that spans borders needs clear steps and steady communication. Executors and beneficiaries must know what to expect and who does what.
What executors must do when the estate includes foreign property
Executors must locate all assets, confirm ownership, and get professional valuations. They must report foreign assets to HMRC and to any local authority where the building sits.
Extra steps often include appointing local lawyers, ordering land registry searches abroad, and arranging certified translations. Timely evidence of foreign tax paid helps when claiming a credit here.
What beneficiaries should expect: delays, local processes, and fees
Expect delays when an estate includes an asset abroad. Local probate equivalents can block a sale or transfer until cleared. That slows the whole estate.
Professional fees, translation costs, and registry charges are common. These are normal, not a sign something has gone wrong.
“Distributing assets too early can create personal liability for the executor if a later tax assessment appears.”
How to reduce friction: agree early whether to sell or keep the asset, pick a single lead adviser, and use shared document folders to keep everyone in sync. These simple steps save time and reduce the risk of costly mistakes.
Consider local succession rules and whether a foreign will is needed
Legal title, not nationality, often decides who controls a house after death. The law where a building sits normally drives the transfer process. That can make a local will far more than a convenience.
We recommend thinking about a second will when an asset sits abroad. A local document that meets in-country formalities can speed probate and avoid extra fees.
When a local will simplifies administration
- Local probate may accept a locally compliant will without formal translation delays.
- A foreign will can prevent the need for court interventions and speed up transfers.
- It helps executors show clear title to banks and registries.
Avoiding conflicts between wills and laws across countries
Two wills can unintentionally clash and create litigation. We urge careful drafting so one document does not revoke the other.
Why this matters for inheritance tax planning: neat, matching documents support treaty claims and reduce disputes that eat the estate. Coordinate UK and local advisers so estate planning and local deeds match.
“A clear local will often saves months and cuts legal fees.”
| Issue | Effect | Practical action |
|---|---|---|
| No local will | Probate delays; extra administration | Get a will that meets local rules |
| Conflicting wills | Litigation; assets frozen | Coordinate drafting and include clear revocation clauses |
| Mismatched ownership records | Claims denied; tax relief at risk | Align deeds, valuations and wills with advisers |
For detailed guidance on cross-border wills and probate, see our page on wills and probate for expats and practical notes about owning land abroad at owning property abroad.
Use legitimate inheritance tax planning strategies that stand up to scrutiny
Smart estate planning relies on practical measures, not clever-sounding shortcuts. We focus on steps that reduce risk, protect family wealth and hold up if HMRC reviews the files.
Gifting and the seven‑year rule, plus overseas gift tax traps
Gifts made more than seven years before death usually fall outside the estate for iht. That simple rule works, but timing matters.
Watch out: some countries treat gifts differently. Local gift levies or withholding rules can create unexpected charges or reporting duties.
Life insurance to cover an IHT bill
Life cover is a practical fix. It does not remove tax liability, but it funds the bill so heirs need not sell an asset in haste.
Tip: place a policy in trust to speed payment to beneficiaries and keep proceeds outside the estate value.
Reliefs that may apply, including business or agricultural relief
Business and agricultural reliefs can cut the taxable value of qualifying assets significantly.
- Check qualifying tests carefully — overseas connections can disqualify an asset.
- Get specialist advice before assuming relief applies.
Why “magic” offshore structures often fail under anti‑avoidance rules
Offshore trusts and companies can sound attractive. In practice, UK anti‑avoidance rules often look through them and reassign tax consequences.
“Poorly structured arrangements can add cost and risk rather than save tax.”
| Strategy | When it helps | Key caution |
|---|---|---|
| Gifting (7+ years) | Reduces estate value | Local gift rules may still bite |
| Life insurance in trust | Provides liquidity | Must be correctly arranged |
| Business/agricultural relief | May reduce taxable amount | Strict qualifying conditions |
Our advice: get joined‑up planning with UK and local advisers. A coordinated plan saves tax and, more importantly, spares families the rush and stress of sudden sales.
Plan ahead if you’re leaving the UK but still hold overseas property
Moving abroad involves more than boxes and flights; it can reshape how your estate is treated for tax.
Timing your move in light of the long-term residence test
Since 6 April 2025, the long‑term residence (10/20) test can leave you treated as deemed domiciled. That means a UK resident may still face iht on worldwide assets after they move.
The “tail” can last up to ten years. The longer your UK residence before departure, the longer the continued liability.
Reducing exposure during the tail period without creating new liabilities
Plan carefully. Gifts or transfers can reduce future liability but may trigger local taxes or transfer charges abroad.
Coordinate with local advisers and check relevant agreements before any move. A treaty can affect whether a foreign tax credit is available.
- Checklist: residency history, full asset list, title deeds, wills and recent valuations.
- Agree who leads the planning and keep records of all actions and payments.
- Focus on outcomes: protect family wealth and avoid surprises for executors.
“Timing and joined‑up advice make the difference between a tidy plan and a costly surprise.”
Conclusion
Small, well-documented steps avoid big problems for heirs.
We must be clear: inheriting an overseas property can expose an estate to extra tax and possible double taxation, but the risk is manageable with the right sequence.
First, confirm residency status and any long‑term residence tail. Next, identify which state claims the asset. Then seek available agreements or credits to reduce overlap.
Keep clean valuations, consistent reporting and realistic timelines. Remember the headline bands — they decide whether an estate faces the 40% charge.
Get early, joined‑up professional help — a UK adviser plus local counsel. With calm planning, you protect the estate and leave a smoother legacy for the people you love.