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Do you pay Inheritance Tax from money overseas?

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Do you pay UK inheritance...

Do you pay UK inheritance tax on money from overseas?

Submitted: 6 years ago.Category: UK Tax
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6/29/2011
UK Tax Professional: Tony Tax, Tax Consultant replied 6 years ago
Tony Tax
Tony Tax, Tax Consultant
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Can you elaborate a little more about your situation please?

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Customer reply replied 6 years ago

I have recently been informed I am the sole benefactor and have been willed a large sum of money from Japan. From a UK national but has lived over there for many years, possibly 50 years and has had no immediate family as never married and has no children. It’s very early staged as I’ve only just been informed but could be in the region of over 1 Million U.S. Dollars they say! Not sure if this is correct, might be lost in translation but if true do I pay Inheritance Tax or Capital Gains if its transferred into my bank? Do I pay tax if I share it out with family? Who do I need to inform (HMRC) if anyone, other than my surprised bank?

UK Tax Professional: Tony Tax, Tax Consultant replied 6 years ago

Are you sure this is not a scam? Do you know who the deceased was and why you are being left money by him? Before you give anybody your bank details, you need to be sure that you aren't being taken for a ride.

Inheritance Tax is paid by the deceased's estate before any distributions to beneficiaries. The capital you will receive will not be taxable in the UK but any income you earn from it such as deposit interest will. You ought to warn your bank in advance of any payment into your bank as they need to comply with money laundering rules. Any evidence you have of the provenance of the money will help with that.

If you give some of the money to your family there will be no immediate tax consequences. However, should you not live for seven years after making any gifts, their value will remain in your estate for Inheritance Tax purposes.

Let me know if you have any queries.

Tony Tax
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Customer reply replied 6 years ago

The money has been left by my relative. Although a distant one he has no other immediate family and I was contacted by a woman, head of overseas at bank called Kito-Nippon, via fax and e-mail, who hold the estate stating he left my full name and address to contact. Also, they have asked me to attend a meeting over there to finalize funds or they will appoint a local attorney the bank uses to do it on my behalf if I can’t attend. Does this sound like a scam? They have not asked me for any bank details. I did not even know of his death. It does sound surreal and I’ve not got to terms with it yet. I read yesterday that Inheritance Tax is 40% and if all came good wondered if I lose that amount?

UK Tax Professional: Tony Tax, Tax Consultant replied 6 years ago

Normally, UK nationals' estates will be liable to UK Inheritance Tax wherever they live in the world unless they make a complete break with the UK and become a citizen of another country.

As your relative had not lived in the UK for 50 years, he effectively made a domicile of choice, i.e. Hong Kong. He has long since fallen off the UK tax authorities’ radar. There will be no UK Inheritance Tax to pay.

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Customer reply replied 6 years ago

The situation has moved on. An attorney has been appointed for me by the bank. He has nearly finalized details after two signing sessions with the bank for release of inheritance. However a FEAC foreign exchange has not been paid. The original funds were transferred from one bank to current bank called Kita-Nippon Ltd and was converted from Japanese Yen into U.S. Dollars. There is a 1% conversion charge which was not paid at the time which they are asking me to pay before release of funds. They say they cannot deduct this amount from funds.

UK Tax Professional: Tony Tax, Tax Consultant replied 6 years ago

A beneficiary of an estate is not usually asked to pay fees which are rightfully the responsibility of the executors of the deceased's estate. It is, however, a commonly used tactic by fraudsters, i.e. to ask somebody for a fee to release some money that they have been told is theirs.

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