Tax on inheritance from abroad

[Clem135]

I was recently asked the below questions by my FIL in a family meeting about his will, which he has just changed due to getting divorced and some rather messy family politics. Rather sad to discuss, but I appreciate he wants us prepared.

My darling FIL is a US citizen and lives in the US. My husband is also a US citizen and is a UK resident. All money and assets are US based.

When my FIL passes (hopefully a very very long time away), I am aware that his estate will pay US inheritance tax. Would we then need to pay any kind of tax to bring the money to the UK? Whether inheritance, capital gains etc.

Really sorry for the awkward topic.

I found this online. It seems not, applicable taxes will be paid in the USA. I suppose your DH is aware of this, their IRS is notorious for taxing their citizens on worldwide income, I think I heard.tax expert answers questions www.bbc.co.uk/news/10237355

It is the answer to Q2.

It sounds as though your FIL's permanent home (domicile) is the USA which means he would only pay inheritance tax on UK assets. He has no UK assets so no UK inheritance tax. There is no capital gains tax on death so whoever inherits is deemed to have acquired assets at market value on the date of death for UK tax purposes.

Thanks both!

It is my understanding that your husband as a UK resident will have to pay capital gains tax on any money inherited, either in UK or from abroad.

But you will get a lot of different answers on a public forum. Best to consult a tax lawyer who is familiar with estate planning from an international perspective.
It will be money well spent.

No one pays UK capital gains tax on money or assets when they inherit them. You are deemed to acquire them at market value on the death and so would only be liable to capital gains tax on gains accruing after that date. If you later sold an asset that you have inherited then there would be capital gains tax on the increase in value after the death.

As UK residents you pay capital gains tax on disposal of worldwide assets. If your husband also pays US tax on the same gain in the USA then you claim credit so you are not double taxed but you should seek tax advice.