What Are U.K. Inheritance Laws and Taxes for U.S. Citizens?

The short answer: England and Wales give you nearly complete freedom to leave your estate as you wish, so unlike France or Spain, the U.K. will not force a share to your children. The difficulty for a U.S. citizen living in the U.K. is tax. U.K. inheritance tax runs at 40 percent above a threshold of 325,000 pounds that has been frozen for years, and since April 2025 it applies to your worldwide assets, including everything you own in the United States, once you have lived in the U.K. for ten of the last twenty tax years. The United States taxes your worldwide estate as well. A 1978 treaty keeps the two from taxing the same asset twice, but only if the plan is built to use it.

The other trap is the American revocable living trust. The U.K. recognizes trusts, which sounds helpful, but its tax rules treat a trust you control and benefit from very differently from the way U.S. law does, and a trust created at the wrong time can make things worse rather than better. This article walks through the U.K. rules on who inherits, how inheritance tax works and whom it reaches, how the U.K. treats American trusts, and what a U.S. citizen with U.K. ties should have in place. Scotland has its own succession law, including fixed rights for spouses and children, and is not covered here.

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Which Law Governs Your Estate If You Live in England?

The United Kingdom never adopted the EU Succession Regulation and, having left the EU, cannot. English courts apply their own conflict-of-laws rules instead: succession to movable property, such as bank accounts, investments, and personal effects, is governed by the law of the country where you were domiciled at death, and succession to immovable property, meaning land and buildings, is governed by the law of the country where the property sits.

For an American living in England, the practical result is that a London flat passes under English law, a house in New Jersey passes under New Jersey law, and your financial accounts pass under the law of wherever you were domiciled, which is a legal concept about your permanent home and can remain the United States for many years after you move. Domicile is fact-specific and often contested. It also, until April 2025, determined how far U.K. inheritance tax reached, which is why the shift to a residence test described below was such a large change.

Can You Leave Your Estate to Whomever You Want?

Yes. England and Wales have no forced heirship. You may leave your entire estate to your spouse, to one child and not another, to a charity, or to a friend.

The one check is the Inheritance (Provision for Family and Dependants) Act 1975. A spouse or civil partner, a former spouse who has not remarried, a child, a person treated as a child of the family, a cohabitant who lived with you as a partner for the two years before death, and anyone you were financially maintaining can ask a court for “reasonable financial provision” from the estate if the will or the intestacy rules leave them without it. The claim must be brought within six months of the grant of probate, and the court has discretion, not a formula. For most American families the Act is a background risk rather than a planning constraint, but a plan that cuts out a dependent spouse or a minor child invites a claim.

How Does U.K. Inheritance Tax Work?

U.K. inheritance tax, usually called IHT, is charged on the estate rather than on each heir, at a flat 40 percent on the value above the nil-rate band of 325,000 pounds. When a home passes to children or other direct descendants, an additional residence nil-rate band of up to 175,000 pounds applies, reduced by one pound for every two pounds the estate exceeds two million pounds. Both bands have been frozen since 2009 and 2020 respectively, and the November 2025 Budget extended the freeze to April 2031. A surviving spouse can use any part of these bands the first spouse did not, so a married couple leaving a home to their children can pass up to one million pounds free of IHT.

Everything left to a spouse or civil partner is exempt, subject to the cap discussed in the next section. Everything left to charity is exempt, and leaving at least ten percent of the net estate to charity reduces the rate on the rest to 36 percent.

Lifetime gifts are drawn back into the estate if you die within seven years of making them, with the tax on gifts made three to seven years before death tapered from 32 percent down to 8 percent. Each person may give away 3,000 pounds a year outside these rules, plus small gifts of up to 250 pounds per recipient and set amounts on a marriage. From April 6, 2027, most unused pension funds and lump-sum death benefits will be brought into the estate for IHT as well, which matters for Americans who built up a U.K. workplace pension.

Does U.K. Inheritance Tax Reach Your American Assets?

This is the question that changed on April 6, 2025. Before that date, the reach of IHT depended on domicile. Now it depends on residence.

If you have been U.K. tax resident for at least ten of the twenty tax years before the year of your death, you are a “long-term U.K. resident” and IHT applies to your worldwide estate: the brokerage account in New York, the house in Connecticut, the IRA, everything. If you have not reached that threshold, IHT applies only to your U.K. assets. The years do not need to be consecutive. And the exposure does not end when you leave: a long-term resident who moves away remains within the worldwide charge for between three and ten years afterward, depending on how long they were resident.

The spouse exemption has a matching limit. Where a long-term resident leaves assets to a spouse who is not a long-term resident, the exemption is capped at 325,000 pounds rather than unlimited. The non-resident spouse can elect to be treated as a long-term resident to unlock the full exemption, but the election brings that spouse’s own worldwide estate into the U.K. net and lasts until they have been non-resident for ten consecutive tax years. For an American couple where one spouse arrived years before the other, this cap is a frequent and expensive surprise.

What About U.S. Estate Tax and the Treaty?

The United States taxes its citizens on their worldwide estate wherever they live, with a basic exclusion of 15 million dollars per person for deaths in 2026. Most Americans in the U.K. will owe no federal estate tax, but they will owe U.K. IHT on far smaller estates, and the two systems have to be reconciled.

The U.S.-U.K. Estate and Gift Tax Convention, signed in 1978 and in force since 1979, does that. It contains a tie-breaker that assigns a single treaty domicile to a person both countries would otherwise claim, working through permanent home, center of vital interests, habitual abode, and nationality. It allocates primary taxing rights, requires each country to grant a non-domiciliary the same exemptions it grants its own residents in proportion to the property it taxes, and provides credits so that tax paid to one country reduces tax owed to the other. The treaty predates the 2025 U.K. reforms and still speaks in terms of domicile, so how it interacts with the new residence test is an area where advice from a U.K. specialist is essential.

How Does the U.K. Treat an American Trust?

Unlike civil-law countries, the U.K. recognizes trusts fully. That does not make the American revocable living trust safe.

Under U.S. law a revocable trust is ignored for tax purposes because you control it and can take the assets back. U.K. tax law reaches a similar conclusion for inheritance tax, treating assets you can still enjoy as part of your estate, so the trust provides no IHT saving. Where it can hurt is timing. Under the reforms effective April 2025, a trust’s status follows its settlor. Assets outside the U.K. in a trust settled by someone who is not a long-term resident are excluded property and outside IHT, but that treatment ends when the settlor becomes a long-term resident. For trusts created on or after October 30, 2024, a settlor who later crosses the ten-year line can find the trust assets both inside their own estate at death and subject to the U.K.’s separate regime for trusts, with charges of up to six percent every ten years and on distributions.

Irrevocable trusts, including the asset protection and Medicaid planning trusts common in our practice, fall squarely within that trust regime once the settlor is a long-term resident, and U.K.-resident beneficiaries may face U.K. income tax on distributions under rules that are unfamiliar to U.S. trustees.

Separately, any trust that acquires U.K. land or incurs a U.K. tax liability must be registered on HMRC’s Trust Registration Service within 90 days, whether or not it has a U.K. trustee. A U.S. family trust that buys a flat for a child at university has a registration obligation most U.S. trustees have never heard of.

The planning point is that Americans moving to the U.K. should have their trusts reviewed before arrival, and Americans already in the U.K. should not create new U.S. trusts without U.K. advice. In some cases a trust settled before the ten-year mark can preserve excluded property status for a time. In others the right answer is to unwind the trust and rely on other tools.

What Estate Planning Tools Work in the U.K.?

An English will. A will drafted under English formalities, covering U.K. assets and naming U.K.-based executors, is what the Probate Registry will act on. It must be coordinated with the U.S. will so that neither revokes the other, the most common cross-border drafting failure we see.

A lasting power of attorney. The U.K. equivalent of a durable power of attorney is the lasting power of attorney, or LPA, which comes in two forms, one for property and finances and one for health and welfare. An LPA has no effect until registered with the Office of the Public Guardian, which currently costs 92 pounds, and the donor must have capacity when signing. A U.S. power of attorney will generally not be accepted by U.K. banks or the National Health Service.

How property is titled. English law distinguishes joint tenants, where the survivor takes automatically, from tenants in common, where each share passes under the owner’s will. The choice affects both probate and the use of the nil-rate bands.

Life insurance written in trust. A U.K. policy held in a simple trust pays outside the estate and outside IHT, a routine step in U.K. planning.

Lifetime giving. The seven-year rule makes early gifts the main IHT planning tool for long-term residents, subject to U.S. gift tax reporting.

A deed of variation. Beneficiaries can rewrite the distribution of an English estate within two years of death with retroactive IHT effect, a flexibility U.S. law does not offer.

What Happens to U.K. Assets When You Die?

U.K. banks, brokers, and the Land Registry will require an English grant of representation before releasing or transferring assets. A U.S. probate grant is not recognized in England and cannot be resealed; resealing is available only for Commonwealth grants under the Colonial Probates Act. The executor must apply to the English Probate Registry as a fresh matter, file an IHT account, and pay any tax due before the grant issues. Where the deceased was domiciled in the United States, the English court will look to the U.S. will and the law of the U.S. domicile for movables and to English law for U.K. real estate, which is why the two wills need to fit together.

Assets back home follow U.S. procedures. Real estate will need probate or another transfer mechanism in the state where it sits, and New York and Connecticut impose their own estate taxes. Our overview of how probate works in New Jersey and New York covers what a family abroad should expect.

Should You Have One Will or Two?

Two, for most people with assets on both sides of the Atlantic, though the reasons differ from the reasons in France or Spain. England has no forced heirship to plan around and no EU choice-of-law election to coordinate. The question is purely one of administration and tax.

A single U.S. will is formally valid in England. Under the Wills Act 1963, English courts treat a will as properly executed if it complied with the law of the place where it was signed, or of the testator’s domicile, habitual residence, or nationality at signing or death. A New Jersey will signed in New Jersey qualifies. But the English Probate Registry will want the original will or a court-sealed copy, an affidavit of U.S. law, and evidence of the U.S. probate if one is under way. The original can sit in only one court at a time. The U.S. executors, who may never have dealt with HMRC, must complete the IHT account before the English grant issues. If the will pours everything into a revocable living trust, the English estate is being routed into a structure that carries U.K. trust consequences the family may not want. Meanwhile the London flat cannot be sold and the U.K. accounts stay frozen.

Two wills avoid most of that. An English will, executed under English formalities, covers only U.K. assets, names executors who can act in England (a solicitor or trust company is common), states your domicile, and leaves the U.K. assets outright or into an English trust drafted with the U.K. trust regime in mind rather than into the American revocable trust. The U.S. will covers everything else. The English executors can obtain the grant and settle IHT on their own timetable, and the U.S. estate proceeds separately.

Three rules keep two wills from undoing each other:

• No general revocation clause. Each will revokes only prior wills dealing with the assets it covers and expressly leaves the other in force. A later English will revoking “all former wills” cancels the American one.
• One coordinated tax plan. The nil-rate bands, the residence nil-rate band, the charity rate, and the cap on the spouse exemption for a non-long-term-resident spouse are all computed on the estate as a whole. Who receives the U.S. assets under the U.S. will changes the U.K. tax on the English assets, so the two documents must be drafted together, not merely side by side.
• Nothing left in the gap. Decide which will catches assets in third countries and property acquired later, and say so in both.

Assets that pass outside both wills need the same attention. U.K. pension death benefits, which enter the IHT net in April 2027, and life policies written in trust pass by nomination, and the nominations should match the plan.

Have both advisors review both drafts before either is signed, and sign them in an order where the second expressly acknowledges the first.

How Do You Coordinate Planning on Both Sides?

A U.K. solicitor handles the English will, the LPA, U.K.-side IHT planning, and the trust review. A U.S. attorney handles the U.S. will and trusts, federal and state estate tax, beneficiary designations, and the treaty position. Each needs the other’s drafts, and both need the same facts: a complete asset list showing where each asset sits and how it is titled, each spouse’s U.K. arrival date and residence history, the children’s citizenships and residences, and every existing will and trust. The residence history matters more than anything else, because the ten-year line drives the entire U.K. analysis and it can be planned around only before it is crossed.

Plan Well. Live Better.

The U.K. is the most familiar of foreign legal systems for an American, and that familiarity is what makes its inheritance tax so easy to underestimate. At Milvidskiy Law Group, we handle the U.S. side of cross-border plans and coordinate directly with U.K. counsel so that the two halves of the plan work together. Learn more about our international estate planning services.

This article is for general informational purposes only and does not constitute legal or tax advice, and it does not address U.K. law as a U.K. solicitor would. Reading this article does not create an attorney-client relationship. Cross-border succession and tax rules depend on individual facts and change frequently; the U.K. rules described here changed substantially in April 2025 and further changes are scheduled for 2027. Figures were verified in September 2026 against U.K. government and other sources and should be confirmed before relying on them.