Yes, US estate tax can apply to a UK resident who is not a US citizen, but only on their US-situated assets, such as shares in US companies and property located in the United States. For most people in this position the tax-free amount is just $60,000 of US assets, far below the exemption available to US citizens, though the US-UK tax treaty and UK double taxation relief can reduce or remove a double charge (IRS, as at August 2026, subject to change).
This surprises many families. A UK resident with a modest US share portfolio, or a holiday home in Florida, can leave their executors with a US federal estate tax return to file and a bill to settle before UK probate can complete. This guide explains who is caught, what counts as a US asset, the thresholds and rates, and how the reliefs work. It is general information about the law and practice of England and Wales as at August 2026, and all figures are subject to change.
US estate tax and UK inheritance tax are two different taxes
UK inheritance tax and US estate tax are separate systems run by separate authorities, and an estate can be exposed to both. UK inheritance tax is charged on the worldwide estate of someone who was UK domiciled or a long-term UK resident, with a standard rate of 40% above the available thresholds (gov.uk, as at August 2026, subject to change). US estate tax, by contrast, reaches non-US persons only on assets it treats as located in the United States, again at a top rate of 40% (IRS, as at August 2026, subject to change).
A point that catches people out is that US estate tax turns on domicile for US transfer-tax purposes, which is not the same as UK residence or UK domicile, and not the same as US income tax residence. A UK resident who is not a US citizen and has not made the United States their permanent home is generally treated as a non-resident, non-citizen for these rules, and taxed only on US-situated property. US citizens, wherever they live, are taxed on their worldwide estate by the US.
What counts as a US-situated asset
The rules on what is "US situs" are specific, and they are not always intuitive. The value that matters is the market value at the date of death (IRS, as at August 2026, subject to change). The table below is a general guide only, and the treatment of a particular holding can depend on how it is structured.
| Asset | Generally US-situated? |
|---|---|
| Real estate located in the United States | Yes |
| Shares in US corporations (including US shares held through a UK broker) | Yes, wherever the certificate or account sits |
| Shares in a US mutual fund | Yes |
| Tangible property physically in the US (for example art or a car) | Yes |
| Cash on deposit in a US bank account (not connected to a US business) | Generally not treated as US-situated |
| Certain US debt that qualifies as portfolio interest | Generally exempt |
| Proceeds of life insurance on the deceased's own life | Generally not treated as US-situated |
General guide based on IRS guidance for nonresidents not citizens of the United States, as at August 2026, subject to change. Situs can depend on structure, so specific holdings are worth checking.
The most common trap is US shares. Owning Apple or Microsoft stock through an ordinary UK investment account still counts as holding a US-situated asset, because the situs follows the company, not the platform. Many diversified portfolios and some US-listed exchange-traded funds carry this exposure without the owner realising it.
The thresholds, rates and the $60,000 problem
The gap between what a US citizen can pass free of estate tax and what a non-US person can is large. For 2026, a US citizen or US-domiciled individual has a federal exemption of $15,000,000, following the One Big Beautiful Bill Act, with a top rate of 40% (IRS, as at August 2026, subject to change). A non-resident, non-citizen is entitled, before any treaty, to an exemption equivalent of only $60,000 of US-situated assets (IRS, as at August 2026, subject to change).
| Feature | Non-US person (UK resident, not a US citizen) |
|---|---|
| Assets taxed | US-situated assets only |
| Exemption before treaty | $60,000 of US assets |
| Filing threshold | US assets over $60,000 |
| Top rate | 40% |
| Return | Form 706-NA |
| Deadline | Within 9 months of death (extension via Form 4768) |
Source: IRS, estate tax for nonresidents not citizens of the United States, as at August 2026, subject to change.
Because the threshold is measured against US-situated assets, a UK resident with, say, £250,000 of US shares is over the line and their executors have a US return to prepare, even though the same estate might sit comfortably within UK inheritance tax thresholds.
How the US-UK estate and gift tax treaty can help
The 1978 US-UK Estate and Gift Tax Convention, in force since 1979, can significantly improve the position for a person treated as UK domiciled who is not a US citizen. Rather than the flat $60,000, the treaty can allow a share of the same unified credit a US citizen receives, calculated broadly as the full US exemption multiplied by the proportion of the estate that is US-situated (HMRC Inheritance Tax Manual IHTM27170, as at August 2026, subject to change).
In practice that means the exemption scales with how much of the worldwide estate is in the US. A person whose US assets are a small slice of a much larger estate can end up with an effective exemption in the millions of dollars rather than $60,000. Claiming this treaty relief usually means filing the full return and disclosing worldwide assets, so it involves more paperwork, but the saving can be substantial. The treaty also sets tie-breaker rules to decide which country has the primary right to tax where someone could be treated as domiciled in both.
Avoiding a double charge between the US and the UK
Where the same asset is exposed to both US estate tax and UK inheritance tax, the aim of the treaty and of UK relief is to prevent the estate paying full tax twice on the same property. Under UK rules, HMRC can give a credit for the overseas tax paid on an asset against the UK inheritance tax due on that same asset, limited to the lower of the two amounts (gov.uk, Inheritance Tax: Double Taxation Relief, as at August 2026, subject to change).
The mechanics matter for timing. HMRC may allow a double taxation credit provisionally on the IHT400 account, but the estate is generally not finalised until the US tax has been certified as paid (HMRC Inheritance Tax Manual IHTM27170, as at August 2026, subject to change). For executors, that can mean the US filing has to be dealt with before UK matters can close, which is one reason cross-border estates take longer to administer. Our related guide on what probate involves sets out the wider administration process.
Practical steps for UK residents with US assets
Cross-border exposure is easier to manage before death than after it. A few general points tend to come up:
- Know what you hold. Review whether any investments are US shares, US funds or US property, since these are the assets that create the exposure.
- Keep records. Executors will need date-of-death valuations and, for a treaty claim, a picture of the worldwide estate.
- Consider structure. How US assets are held can change their situs, though changes have their own tax and practical consequences and are not decisions to take lightly.
- Coordinate the two systems. UK inheritance tax planning and any US exposure are worth looking at together rather than separately, as part of a joined-up estate plan.
- Take qualified advice. Cross-border estate tax is technical, and the reliefs depend on precise facts, so specialist US and UK input is often sensible where the sums are meaningful.
- US estate tax reaches non-US persons on US-situated assets only, at a top rate of 40% (IRS).
- The exemption before any treaty is $60,000 of US assets; a US return (Form 706-NA) is due within 9 months of death where US assets exceed that (IRS).
- US shares held through a UK account are still US-situated (IRS).
- The US-UK treaty can replace the flat $60,000 with a pro-rated share of the full US exemption for UK-domiciled non-citizens (HMRC IHTM27170).
- UK double taxation relief can credit US tax paid against UK inheritance tax on the same asset (gov.uk).
A note on Scotland and Northern Ireland
US estate tax and the US-UK treaty apply across the whole of the UK, so a resident of Scotland or Northern Ireland with US assets faces the same US position as a resident of England and Wales. What differs is the domestic side. Scotland has its own succession law and uses confirmation rather than a grant of probate, and Northern Ireland runs a separate but broadly similar system to England and Wales. This guide describes England and Wales, and cross-jurisdiction estates can benefit from advice in each relevant country.
Frequently asked questions
Do UK residents pay US estate tax?
A UK resident who is not a US citizen can be liable to US estate tax, but only on assets treated as located in the United States, such as US shares and US property. The tax-free amount before any treaty relief is $60,000 of US assets, and the top rate is 40% (IRS, as at August 2026, subject to change).
Are US shares held in a UK account subject to US estate tax?
Generally yes. Shares in US companies are treated as US-situated wherever they are held, so owning US stock through a UK broker or ISA does not remove the exposure. Once US-situated assets exceed $60,000, executors may need to file a US estate tax return (IRS, as at August 2026, subject to change).
What is the US estate tax exemption for non-US citizens?
Before any treaty, a non-resident, non-citizen has an exemption equivalent to $60,000 of US-situated assets, compared with a $15,000,000 exemption for US citizens and US-domiciled individuals in 2026 (IRS, as at August 2026, subject to change). The US-UK treaty can provide a larger, pro-rated exemption for UK-domiciled non-citizens.
How does the US-UK estate tax treaty help?
The 1978 US-UK Estate and Gift Tax Convention can allow a UK-domiciled person who is not a US citizen to claim a share of the full US unified credit, rather than the flat $60,000, broadly in proportion to how much of the estate is US-situated. It also sets rules to decide which country taxes first (HMRC IHTM27170, as at August 2026, subject to change).
Can the same asset be taxed by both the US and the UK?
An asset can fall within both systems, but relief is designed to prevent a full double charge. HMRC can give a credit for US tax paid on an asset against the UK inheritance tax due on that same asset, limited to the lower of the two amounts (gov.uk, as at August 2026, subject to change).
Which US form do executors file and by when?
For a non-resident, non-citizen with US-situated assets over the threshold, the executor files Form 706-NA, generally within 9 months of the date of death, with an extension of time to file available through Form 4768 (IRS, as at August 2026, subject to change).