US–UK cross-border inheritance & estate tax

When an estate or a lifetime gift touches both the United States and the United Kingdom, two separate tax systems can reach the same assets. Here is how each one works in 2026, how the treaty stops you paying twice, and the traps that most often catch cross-border families.

Reflects 2026 rules · reviewed against current US (IRS) and UK (HMRC) law · an estimate, not advice.

The one question that decides everything: who is taxed on worldwide assets?

Both countries tax some people on their worldwide estate and others only on assets located there. Get that classification wrong and every number is wrong.

The US side — 2026 figures

• $15,000,000 unified lifetime estate & gift exemption per person (indexed); 40% top rate on the excess.
• Portability: a surviving spouse can carry over a predeceased spouse's unused exemption (DSUE) — up to a combined $30M — for estate and gift tax, but not for GST.
• $19,000 annual gift exclusion per recipient; gifts above it draw down the lifetime exemption (Form 709).
• NRAs get only a $60,000 exemption-equivalent (about $13,000 of credit) unless the treaty gives more.
• 16 US states plus DC levy their own death taxes on top of the federal tax.

The UK side — 2026 figures

• £325,000 nil-rate band, plus up to £175,000 residence nil-rate band (tapered away above a £2M estate). 40% above the threshold (36% if 10%+ passes to charity).
• Unlimited spouse/civil-partner exemption where the recipient is UK-domiciled or a long-term resident — otherwise it is capped unless a s.267ZA election is made.
• Business & Agricultural Relief: from 6 April 2026, 100% relief is capped at £2.5M of combined qualifying assets (transferable to £5M between spouses), 50% above; AIM shares fall to 50%.
• Unused pensions come within IHT from 6 April 2027.
• Lifetime gifts can be tax-free if you survive 7 years (the PET rule), with taper relief in between.

The US–UK estate & gift tax treaty

The 1978 US–UK Estate & Gift Tax Treaty (in force since 1979) allocates primary taxing rights — generally to the country of domicile — sets tie-breaker and situs rules, and grants credits so the same asset is not fully taxed twice. Where it applies, the treaty can override the ordinary situs rules. It is often the difference between a manageable bill and a punitive one, so a genuinely cross-border estate should always be checked against it.

The traps that catch US–UK families

• The new UK residence test. A long-term US expat in Britain can slip past the 10-of-20-year line and pull their entire worldwide estate into UK IHT — often without realising the old "non-dom" shelter is gone.
• Situs of shares. Shares in a US company are US-situs for an NRA even if held through a UK broker — a common six-figure surprise.
• The spousal cliff. Leaving assets to a spouse who is neither a US citizen (US side) nor UK-domiciled/long-term-resident (UK side) can lose the unlimited marital exemption without a QDOT or a s.267ZA election.
• Double filing. A US person's UK estate may still owe US Form 706 and UK IHT; large gifts from a UK person to a US recipient can trigger US Form 3520.

See your own numbers

HeirCalc models the US and UK sides together — applying the exemptions, the residence test, the situs rules and the treaty — and shows the exposure in each country with the statutory reason behind every figure. It runs entirely in your browser; nothing is saved or sent anywhere.

This guide is general information for 2026, not legal, tax, or financial advice. Cross-border estate and gift tax turns on precise facts — residence history, domicile, situs, treaty positions, trusts and forced-heirship rules — that can change the outcome. Confirm your situation with a qualified cross-border professional. HeirCalc is an estimator by Krometis Analytics.