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Foreign Assets

Also known as: Overseas Assets, International Assets

Definition

Foreign assets are property, money, investments, or possessions located outside the UK that form part of your estate, including overseas property, foreign bank accounts, and international investments.

Understanding foreign assets is essential for estate planning because UK-domiciled individuals pay inheritance tax on their worldwide holdings, not just UK-based property. Even the Channel Islands and Isle of Man count as foreign jurisdictions for tax purposes.

What Do Foreign Assets Mean?

Foreign assets comprise any property or possessions situated outside the United Kingdom that form part of your estate. Under HMRC guidance (form IHT417), this includes overseas real estate, foreign bank accounts, cryptoassets held abroad, international shares and securities, businesses or interests in businesses located overseas, and personal possessions kept in other countries. Importantly, assets held in the Channel Islands and Isle of Man are treated as foreign assets for inheritance tax purposes, despite being British Crown Dependencies.

The legal treatment of foreign assets depends on your domicile status—essentially, your permanent home country for legal and tax purposes. If you're UK-domiciled, the Inheritance Tax Act 1984 subjects your worldwide estate to UK inheritance tax, including all foreign holdings. From April 2025, major reforms replaced the domicile-based system with a residence-based test: if you've been UK resident for 10 of the previous 20 years, your worldwide assets are subject to UK IHT. This captures many long-term UK residents and returned expats who previously considered themselves non-domiciled.

Emma, a Manchester resident, owns a holiday villa in Málaga worth £280,000. As a UK-domiciled individual with a total UK estate of £650,000, her worldwide estate (£930,000 total) is subject to UK inheritance tax. Her executors must complete HMRC form IHT417 alongside the standard IHT400 when she dies. Spain may also levy succession tax on the villa at regional rates (7.65%-34% in Andalusia), but the UK-Spain double taxation treaty prevents her being taxed twice—Spanish tax paid can offset UK IHT liability.

Foreign assets create significant probate complications beyond tax. UK grants of probate are generally not recognized abroad—your executors can't simply use a UK grant to access foreign bank accounts or sell overseas property. Commonwealth countries like Australia, Canada (excluding Quebec), and South Africa offer a "resealing" process that converts your UK grant to a valid local grant, typically taking 10-12 working days and covering 70 jurisdictions under the Colonial Probates Act. Non-Commonwealth countries require completely separate probate applications in their jurisdiction, often involving local lawyers, translated documents, and months of additional administration.

The most complex challenge involves forced heirship rules in civil law countries. Unlike the UK's testamentary freedom where you can leave assets to anyone, many countries mandate fixed inheritance shares to children or spouses regardless of your will's instructions. France requires children to receive at least two-thirds of French property, Spain generally two-thirds, and Italy has similar protections. Sophie, a UK widow with two adult children and an unmarried partner, discovered her UK will leaving her £420,000 French farmhouse entirely to her partner was legally unenforceable—French law guaranteed her children two-thirds of the property value regardless of her wishes.

Common Questions

"Do I need to declare foreign assets in my UK will?" Yes, if you're UK-domiciled, you must declare all worldwide assets in your estate, including overseas property, foreign bank accounts, and international investments. HMRC requires details of all foreign assets on form IHT417, even if they're located outside the UK. Foreign assets are commonly overlooked, leading to undervalued estates and potential tax penalties.

"Do I need separate wills for assets in different countries?" It depends on which countries hold your assets and their local laws. A single UK will can cover worldwide assets, but separate wills in each country may speed up probate and ensure compliance with local succession laws. Always consult lawyers in both the UK and the country where assets are held, as one will could inadvertently revoke another if not properly drafted.

"Will my UK will be recognized for my foreign assets?" Not automatically. Many foreign jurisdictions don't recognize UK grants of probate, requiring a separate process called 'resealing' for Commonwealth countries or a completely new grant for non-Commonwealth countries. Some countries have forced heirship rules that override your UK will's instructions, regardless of what you've written. Always seek local legal advice where assets are held.

Common Misconceptions

Myth: Foreign assets aren't subject to UK inheritance tax if they're held overseas.

Reality: If you're UK-domiciled or deemed domiciled (resident in the UK for 10 of the previous 20 years under 2025 rules), your worldwide estate is subject to UK IHT, including all foreign assets. UK inheritance tax applies to your global wealth, not just property physically located in the UK. Only non-UK domiciled individuals are exempt from UK IHT on foreign assets.

Myth: My UK will automatically covers all my foreign assets and will be recognized abroad.

Reality: While a UK will can be drafted to cover worldwide assets, many foreign jurisdictions won't recognize its legal validity without additional steps. Commonwealth countries require "resealing" of UK probate (a separate legal process), and non-Commonwealth countries often require completely new probate applications. Worse, some countries have "forced heirship" rules that override your will entirely, mandating fixed percentages to children or spouses regardless of your wishes.

  • Overseas Property: The most common type of foreign asset for UK residents—immovable property like holiday homes or rental properties located abroad.
  • Immovable Property: Fixed property like land and buildings that often requires separate location-specific wills due to being permanently situated in one jurisdiction.
  • Movable Property: Portable assets like foreign bank accounts and international shares that may be covered by a single worldwide UK will.
  • International Will: A specific legal instrument designed for cross-border estates, drafted under the 1973 Washington Convention for multi-jurisdiction recognition.
  • Forced Heirship: Mandatory inheritance rules in civil law countries that override UK wills, requiring fixed percentages to children or spouses.
  • Repatriation of Assets: The process of bringing foreign assets back to the UK for distribution, involving currency conversion and international transfers.

Need Help with Your Will?

While WUHLD covers UK assets comprehensively, foreign assets require specialist legal advice in each jurisdiction where they're held. Understanding the tax and probate implications is essential for protecting your worldwide estate.

Create your will with confidence using WUHLD's guided platform. For just £99.99, you'll get your complete, legally binding will plus three expert guides. Preview your will free before paying anything—no credit card required.

Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.