Inheritance from overseas

If you receive inheritance from overseas (e.g. India), is there UK inheritance tax? NO.

In UK, inheritance is not on beneficiaries like in certain European countries like Portugal but on the estate of the deceased. Meaning the tax is charged on the deceased wealth and then post-tax amount is distributed. Hence any tax from overseas inheritance will depend on the laws in that country. Eg: India: Estate duty was abolished in India in 1985 and hence there is no tax on death on the deceased person’s wealth (estate).

However, planning ahead on how the assets are distributed by your parent’s Will can ensure that your inherited wealth is protected from:

  • Generational IHT: Whilst wealth inherited from overseas estates will not taxed in the UK, assets inherited from a Will directly will add to your estate and impact the Inheritance Tax payable on your death. See Video for more details.
  • Creditors or Bankruptcy Claims
  • Long Term Care Fees


You are expecting an inheritance of £200k (circa Rs 2cr.) from family. Between you and your spouse, your existing net worth is £800k. (Net worth is defined as your assets: residential property, BTL, ISA, savings, deposits, Jewellery, etc. minus liabilities). In addition, you have life insurance (£400k) and pensions (£200k) that are not assigned to trust and will be paid out to the spouse on death adding to his/her estate. This means on second death, IHT payable will be £240,000!

You wish to protect the incoming inheritance from adding to your IHT bill (40% of the estate) and other attacks as highlighted above.


Trusts are getting popular in India and widely used in HNIs. Assets gifted to the trust will not form part of wealth and hence protected from future inheritance tax.

Finawis Advisors has a tie with Indian advocates to draft the trust deed and help you execute it here in the UK

Family Trusts are well established construct in UK and there is adequate guidance regarding the legal and tax positions.

It may be easier to manage for future generations with limited or no links to India. Any income accrued to the trust can be assigned to you as a beneficiary, if needed, to simplify income tax for trust.

If the assets are retained in India and earn an income, there will be tax considerations in both jurisdictions.

Assuming your children are more than 18 years old, their income will not be clubbed with yours.

However, you lose control of the assets and the income. Further, the assets are not protected from their future divorces or bankruptcies.

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