Inheritance Tax After Moving Abroad: UK, U.S. & Australia (2026)

Last checked: 13 September 2026. Scope: individuals and families with assets, heirs or residence history spanning the UK, United States and Australia. Estate, inheritance and capital-gains rules can depend on citizenship, domicile, tax residence, asset location, trusts, treaties and the exact wording of a will. This guide is for planning and comparison, not personal tax or legal advice.

Moving abroad does not necessarily move your estate out of a country’s tax system.

That sounds obvious, but three very different rules can catch families by surprise. The UK can keep overseas assets inside its Inheritance Tax net for years after a long-term resident leaves. The United States can require an estate return for a nonresident noncitizen with more than US$60,000 of U.S.-situated assets. Australia generally does not tax an inheritance simply because someone receives it, yet a capital-gains event can be triggered in the deceased person’s final return when certain assets pass to a foreign-resident beneficiary.

This is a different problem from our exit-tax guide. Exit tax asks what happens when you leave. Estate exposure asks what happens if you die years later, who inherits, and where the assets sit at that moment.

The three-country starting point

Country	Main cross-border trigger	2026 number that matters	Common misunderstanding
United Kingdom	Long-term UK residence can bring overseas assets into IHT; exposure can continue after departure	10 of the previous 20 tax years; post-departure tail can last 3 to 10 tax years	“I left the UK, so foreign assets are immediately outside UK IHT”
United States	Citizens/residents and nonresident noncitizens use very different estate-tax systems	US$15 million basic exclusion for 2026 citizens/residents; US$60,000 Form 706-NA filing threshold for many nonresident noncitizens with U.S.-situated assets	“The US$60,000 rule applies to every American living overseas”
Australia	CGT event K3 can arise when an Australian-resident deceased’s post-CGT asset passes to a foreign resident and is not taxable Australian property in that beneficiary’s hands	No single inheritance-tax threshold; the asset’s market value and cost base can matter at death	“Australia has no inheritance tax, so death cannot create an Australian tax event”

The key is that these are not three versions of the same tax. They use different connecting factors: residence history in the UK, citizenship/domicile and asset situs in the U.S., and the deceased’s residence plus the beneficiary and asset type in Australia.

UK: leaving can start a countdown rather than end the exposure

From 6 April 2025, the UK moved away from domicile as the main test for bringing overseas assets into Inheritance Tax and introduced the long-term UK residence rules.

HMRC says an individual can be long-term UK resident if they have been UK tax resident for the previous 10 consecutive years or for at least 10 of the previous 20 tax years. If that test is met, overseas assets may be within UK Inheritance Tax when the person dies or makes a chargeable transfer.

See HMRC’s long-term UK residence guidance and detailed residence-tail table.

The post-departure tail can last up to 10 tax years

The surprising part is what happens after departure. HMRC’s current table says the person can remain within the long-term-resident IHT regime for:

UK-resident years in the relevant 20-year lookback when leaving	Consecutive non-UK-resident years generally needed before the tail ends
13 or fewer	3
14	4
15	5
16	6
17	7
18	8
19	9
20	10

That means a person who was UK resident for 18 of the relevant 20 tax years does not necessarily remove overseas shares, cash or property from UK IHT simply by moving abroad. HMRC’s table gives an eight-year tail, assuming the required non-residence continues and no transitional rule changes the result.

The tax rate is simple; the taxable estate is not

For 2026–27 the standard IHT rate on estates remains 40%. The nil-rate band remains £325,000. A separate residence nil-rate band can be up to £175,000 where its conditions are met, and that residence band begins tapering for estates above £2 million.

Official 2026–27 rates are in HMRC’s rates and allowances.

A simple illustration shows why the tail matters. Suppose someone leaves the UK after 18 relevant years of residence and owns £900,000 of UK assets plus £800,000 of overseas investments. If they die while the eight-year tail still applies, it is not safe to assume the £800,000 foreign portfolio is outside the UK estate merely because they were living abroad. The actual IHT bill would still depend on exemptions, spouse or charity transfers, reliefs, the residence nil-rate band, debts, trusts and any treaty.

The planning question is therefore not “Where do I live now?” It is “Am I still inside the UK long-term-residence tail on the date of death or transfer?”

United States: US$60,000 is a nonresident rule—not an expat-American rule

The U.S. system creates one of the easiest cross-border misunderstandings because citizens and residents are treated very differently from nonresident noncitizens.

For estate and gift tax purposes, the IRS says residence is effectively a question of domicile. A person can therefore be a U.S. resident for income-tax purposes yet a nonresident for estate-tax purposes, or vice versa depending on the facts.

The IRS explains this distinction in its estate-tax FAQ.

If you are a U.S. citizen living overseas

Moving abroad does not turn a U.S. citizen into a nonresident noncitizen for federal estate-tax purposes. U.S. citizens remain within the U.S. federal estate-tax system on their worldwide estates.

For a person dying in 2026, the IRS says the federal basic exclusion amount is US$15,000,000. An estate may still file for other reasons, including certain portability elections, but the ordinary 2026 threshold is dramatically higher than the nonresident threshold discussed below.

See the IRS 2026 inflation-adjustment notice.

If you are a nonresident and not a U.S. citizen

A different system can apply. The IRS says an executor generally must file Form 706-NA when a nonresident noncitizen decedent’s U.S.-situated assets, together with specified adjusted taxable gifts and any applicable specific exemption, exceed the US$60,000 filing threshold.

That threshold is not indexed annually. The Form 706-NA instructions also say the return is generally due within nine months after death, unless an extension applies.

Current IRS guidance is here: Some nonresidents with U.S. assets must file estate tax returns and the Form 706-NA instructions.

U.S. shares can be the trap

For a nonresident noncitizen, U.S.-situated assets can include U.S. real estate, tangible property in the United States and stock of corporations organised under U.S. law. The location of the brokerage account does not necessarily change the situs of the shares.

Consider a non-U.S. citizen who lives permanently outside the United States and owns US$200,000 of shares in U.S. corporations. If those shares are U.S.-situated for estate-tax purposes, the estate can cross the US$60,000 Form 706-NA filing threshold even though the investor never lived in the United States.

That does not mean the estate automatically owes tax on US$140,000. Filing threshold and final liability are different questions. Deductions, marital rules and an applicable estate-tax treaty can materially change the result.

This distinction matters for international investors: the asset’s situs can matter as much as the investor’s home address.

Australia: the inheritance may be tax-free to receive, yet death can still trigger CGT

Australia generally does not treat ordinary inherited money or assets as taxable income to the beneficiary merely because they are received. But that is not the end of the analysis.

Australian CGT rules contain a specific event—CGT event K3—that can apply when:

the deceased was an Australian resident just before death;
a post-CGT asset passes to a beneficiary who is a foreign resident; and
the asset is not taxable Australian property in the beneficiary’s hands.

The ATO says the event is taken to happen just before death. A capital gain can arise if the asset’s market value at death is more than its cost base, and the gain is reported in the deceased person’s date-of-death return. Pre-CGT assets acquired before 20 September 1985 are an important exception.

See the ATO’s guidance on assets passing to a foreign-resident beneficiary and its detailed legal explanation of CGT event K3.

A$300,000 capital gain can appear before the beneficiary sells anything

Assume an Australian-resident parent owns a portfolio of foreign-company shares:

Cost base: A$200,000
Market value at death: A$500,000
Beneficiary: adult child who is a foreign resident
The shares are not taxable Australian property in the child’s hands

Under the simplified K3 mechanics:

A$500,000 market value − A$200,000 cost base = A$300,000 gross capital gain.

The A$300,000 is not a statement of the final tax payable. Capital losses, CGT discount eligibility, other income and estate-specific facts can affect the final result. But the timing point is the important one: the beneficiary has not sold the shares, yet the deceased’s final Australian return can still contain a capital gain.

That is why “Australia has no inheritance tax” is not a complete cross-border estate-planning answer.

The Better Places Estate Exposure Map

Before changing country, changing a will or deciding where to hold investments, map the estate through six questions.

Who is the person for each tax system? Citizenship, domicile and tax residence are not interchangeable.
What is the residence history? For the UK, count the relevant tax years and the possible post-departure tail.
Where is each asset legally situated? A U.S. corporate share can be U.S.-situated even when the owner and brokerage account are overseas.
Who receives the asset? In Australia, a foreign-resident beneficiary can change the CGT outcome for some assets.
Is there a treaty or special relief? Treaties can change taxing rights, credits, situs rules and available relief.
Can the estate fund the tax and filing work? The practical problem is often liquidity: the estate may need cash for tax, valuations and professional fees before assets can be distributed.

A worked three-country family example

Imagine a family with these facts:

One parent lived in the UK for 18 of the previous 20 tax years, then moved to Australia.
The family owns UK property, Australian assets and US$200,000 of U.S. corporate shares.
One adult child lives permanently outside Australia.

A one-country estate plan can miss three separate questions:

UK: Has the eight-year long-term-residence tail expired on the date of death?
U.S.: Is the deceased a U.S. citizen/resident for estate-tax purposes, or a nonresident noncitizen—and are the U.S. shares inside Form 706-NA?
Australia: If the deceased is Australian resident, which assets are passing to the foreign-resident child, and could K3 apply?

The same portfolio can therefore be exposed to three completely different connecting rules. The safest planning document is not a country list. It is an asset-by-asset matrix showing owner, country of residence history, citizenship/domicile, asset situs, intended beneficiary, beneficiary residence and treaty position.

What to review before you move

If a move is likely within the next few years, the estate plan should be reviewed before departure rather than after the family is already spread across countries.

Update the residence history for everyone whose estate could be affected.
List investment holdings by issuer country, not just by brokerage location.
Identify beneficiaries who are or may become foreign residents.
Check whether trusts, companies, pensions or superannuation create separate rules.
Record cost bases and obtain valuations where they may matter.
Check estate-tax treaties before making assumptions from domestic thresholds.
Make sure executors know where records and tax documents are held.

Also keep estate planning separate from ordinary tax-residence planning. Our 183-day tax-residency guide explains why day counts alone do not determine tax residence. Estate tax adds another layer because citizenship, domicile, asset situs and historic residence can remain relevant even after day-to-day residence has changed.

The Better Places decision

A cross-border move should trigger an estate review when any one of these is true: you have lived in the UK for many years, you own meaningful U.S. assets, an intended beneficiary lives abroad, or your assets span more than one country.

The goal is not to predict every future tax rate. It is to know which country has a plausible claim on which asset, for how long, and what event makes that claim relevant.

If you can answer those questions asset by asset, you have an estate plan that can survive a move. If you cannot, changing your address may have changed far less than you think.

Official sources

Method and limitations: official HMRC, IRS and ATO material was checked on 13 September 2026. Worked examples are original Better Places illustrations using invented amounts and simplified facts. They do not calculate a person’s final estate, inheritance or capital-gains liability. Spouse and charity exemptions, trusts, pensions, debts, valuations, treaty relief, state taxes and other country-specific rules can materially change the result.

Featured photograph by Centre for Ageing Better on Unsplash.

Inheritance Tax After Moving Abroad in 2026: The UK 10-of-20-Year Tail, U.S. $60,000 Rule and Australia’s CGT Trap