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Inheritance Tax from Parents who Live Overseas

Many people choose to move abroad in their retirement years. Once their children are grown and they are free from responsibilities, they emigrate to sunnier climes to enjoy their golden years. However, this can leave their children wondering how the process for inheritance tax from parents who live overseas works. 

Inheritance tax can be a sensitive and difficult subject to navigate. As well as the emotional baggage, the law can be confusing and tricky to properly understand. We’ve written up a guide for how to go about dealing with inheritance tax from parents who live overseas to ensure you go about things in the correct way. 

How Does Inheritance Tax Work?

Before we get into inheritance tax from parents who live overseas, first we need to outline exactly how inheritance tax works. 

When somebody passes away, there could be a tax applied to the value of their estate. An estate encompasses things like possessions, properties, savings, and investments. However, not every estate is liable to pay inheritance tax, there is a certain threshold that must be met before the tax will be incurred.  

The law states that only estates valued at over £325,000 will be charged an inheritance tax rate of 40%. The tax isn’t applied to the full value, only the excess that brings the value over this specified threshold. 

There’s obviously much more to it, but this is a basic overview of how inheritance tax works. This is important information that will help you understand the process involved in calculating inheritance tax from parents who live overseas. 

Domicile Rules 

If someone who lives outside of the UK passes away, inheritance tax is only applied to their estate if that person was domiciled in the UK or if their assets are based in the UK. 

The latter point is easy to understand, but the former can leave people confused when trying to understand inheritance tax from parents who live overseas. 

According to current legislation, the deceased will be considered domiciled in the UK if they have held a permanent residence in the UK at any point within the three years before their death or if they have lived in the UK for at least 15 of the last 20 years. 

Global Assets 

If the deceased meets one of the above requirements, any inheritance they pass down will be subject to inheritance tax. However, this won’t just be applied to assets based within the UK, but also to assets based anywhere else in the world. 

This is a crucial point when dealing with inheritance tax from parents who live overseas and one that should never be overlooked. Even if the deceased lived abroad, all global assets will be subject to inheritance tax if they are deemed to be domiciled in the UK. 

On the other hand, if the deceased is deemed to have been domiciled abroad, inheritance tax will only be applied to assets based in the UK. 

Are the Inheritance Tax Rates the Same?

The same rates apply whether dealing with inheritance tax from parents who live overseas or in the UK. If your parents’ estate is valued at over £325,000, you will be liable to pay the 40% rate. 

However, there are certain ways to reduce the amount of inheritance tax you have to pay, including through a will.


Navigating inheritance tax from your parents can be incredibly difficult. Not only will you be dealing with the death of your parents, but you’ll have to wrap your head around what are often complex and confusing legal frameworks. Use this guide to learn about inheritance tax from parents who are based abroad to ensure you don’t have any issues.