2

I have some inheritance money that will soon be paid out in the US (I am a US citizen). I would like to transfer it to the UK, where I currently live, to help buy a property.

Will the money be taxed in the UK if I bring it here? If so, do you know by how much?

  • 1
    How will the Inland Revenue know that this is inheritance money instead of just a routine transfer of assets that you have and hold in the US that you are now transferring to UK? – Dilip Sarwate Jan 11 '18 at 17:51
  • I guess they wont. So do you have to tax money that you bring into the UK if it's gift or from someone else? – Jason Jan 11 '18 at 19:43
3

There's no taxation on gifts in the UK, except in some cases where the giver is subject to UK inheritance tax and dies within 7 years of making the gift. As your inheritance will be paid in the US under US law, it won't be subject to this tax. There's also no tax on transferring money into or out of the UK per se.

As a UK resident, you are probably liable for tax on any income (e.g. bank interest) you make from the money even while it is still in the US, if you bring that income the UK, or if it's over £2,000/year - see https://www.gov.uk/tax-foreign-income/non-domiciled-residents

Once it's in the UK it'll be just like any other money you have in the UK. Buying a house to live in will help you to avoid tax on the income from the money, as you don't have to pay tax on the rent you save by owning.

Make sure you keep hold of documentation that explains where the money came from, as you'll need to provide it to satisfy money laundering regulations when actually buying a house with it.

  • The OP will need to declare to the US IRS the capital gain on the eventual sale of the house, no matter what the source of the purchase funds... – DJohnM Jan 12 '18 at 3:36
  • @DJohnM good point, though from a quick search I understand the US also exempts your primary residence from CGT, if you live in it throughout the ownership. – Ganesh Sittampalam Jan 12 '18 at 6:19
  • Only the first $500,000 US. See irs.gov/taxtopics/tc701 – DJohnM Jan 12 '18 at 6:41
  • 1
    Also you will need to prove to the solicitors in the UK where the money came from when you come to purchase a house, so make sure you have a paper trail. – Tim Jan 12 '18 at 11:29
  • @DJohnM It's only $500k if you file a joint US return. Otherwise, $250k. – mkennedy Jan 12 '18 at 20:51

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.