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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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Im receiving and inheritance from UK, Im told before the

Customer Question

I'm receiving and inheritance from UK, I'm told before the money can be wired, I have to pay the taxes for this country. Is this in line with her majesty's creed of 1890 amended in 1908 (still in use).
Submitted: 8 years ago.
Category: Tax
Expert:  Merlo replied 8 years ago.

Hello jvf,


I assume when you say "this country" that you are talking about the United States. If you are a resident of the US, there is no such thing as "inheritance" tax, at least at the federal level. There are a very few states that still impose some form of inheritance tax, but the federal government does not tax inheritance money.


If the deceased person from the UK was a US citizen, then his or her estate might be subject to US estate taxes, if the entire estate were valued at over $2 million. But even then it would be the estate executors's responsibility to file the estate tax return, and if any estate taxes were due they would be paid from the estate assets. Once the net proceeds are available and are distributed to the heirs, there is no "inheritance" tax due from the beneficiares.


If the amount you are receiving is more than $100,000, then you would be required to report receipt of this money to the IRS on Form 3520 (Annual Report on Receipt of Foreign Gifts), but there is no tax due with the form. It is strictly a reporting requirement and is really for your own protection, so that you would have a record of reporting these funds and there could be no question in the future as to where they came from.



Thank you.


Merlo and other Tax Specialists are ready to help you
Customer: replied 8 years ago.
Tax deficit payment on foreign deposit payment at the end of the last quarter 2007, returns on inheritance tax deposit, my late relative died 3 years ago, bank acct was dormat had to reactive this, bank is wiring money, British Tax Department stop funds transfer until i pay taxes on my from bank i am the benefactor.
Customer: replied 8 years ago.
tax deficit payment in foreign deposit payment at the end of the last quarter 2007, returns on inheritance tax deposit. my late relative died 3 years ago, bank account was dormant, had to reactive bank acct, bank starting wiring funds, was stoped by British Tax Department stop funds transfer until I pay taxes on money coming from bank I am the benefactor
Expert:  Merlo replied 8 years ago.

Hello again jvf,


I am not certain I totally understand your situation, so could you please clarify a couple of things.


1. Are you currently a resident of the United States?


2. Do you currently owe back taxes in the UK?

Customer: replied 8 years ago.
yes i'm a resident of the usa, No i dont, but the bank is stating the monies from his project coming out of my late relative acct that taxes have to be paid on that money, this money was from his work he perform, if you have so much money in the banks and you withdraw don't you psy tsx on that money, this money has been in the acct since 2002-2005 is when he died.
Expert:  Merlo replied 8 years ago.

Hello again jvf,


Did your relative have an executor for his estate, or are you the only heir to his estate?


Also, approximately how much money in British pounds was the amount of your inheritance?

Customer: replied 8 years ago.
the only heir to his estate
not sure of pounds its 8 million us dollars
Expert:  Merlo replied 8 years ago.

Hello again jvf,


In British pounds, the amount you inherited is equivalent to approximately 4.4 million British pounds.


In the UK, any estate that is valued over 312,000 pounds is subject to inheritance tax. The current rate on that tax is 40% of the excess over 312,000 pounds, so in essence, there is going to be something close to the equivalent of $3 million US dollars due in inheritance tax payable to the UK.


If your relative had an executor for his estate, then the executor should have already filed the estate tax return and paid these taxes out of the estate. However, if there was no executor and you are the sole heir, then it sounds to me like you are the one who will need to take care of filing an estate tax return on behalf of your relative and paying the appropriate inheritance tax is due before they will release that money to you. Once the money is released and you bring it to the United States, no tax will be due in this country, but you will need to report receiving the money on Form 3520 as mentioned in my earlier post.


You are probably going to need the assistance of a tax consultant who can help you file the proper forms in the UK. I am giving you a link below to a company named Ocra who has offices worldwide and could more than likely help you with the filing of the necessary forms.



Thank you.






Expert:  Merlo replied 8 years ago.

Hello again jvf,


One of the other experts in this forum has just sent me a message regarding your question.


It appears that there are a number of "scams" currently going on where people in the US are being notified that they have an inheritance coming to them from overseas, and that they must first pay tax on this inheritance before receiving the money.


If you are not completely familiar with the terms of your inheritance, then I advise you not to give personal information to anyone regarding this inheritance, and do not give them personal information on your bank accounts until you an verify that this is a valid inheritance.


As I told you in my earlier post, typically an executor for the estate would have already taken care of this, so if that was not done, then chances are this might be a scam, so just be careful of how you proceed on this.