What to Do When You Receive an Inheritance as a British Expat

Updated: 16 October 2026.

Receiving an inheritance can change your financial position overnight.

It may give you the opportunity to strengthen your retirement plans, repay debt, help your children, buy property, invest for the future or simply create greater financial security.

But an inheritance often arrives at a difficult time. You may still be dealing with the loss of a parent or another family member while suddenly having to make decisions involving a significant amount of money or assets.

For British expats, there can be another layer of complexity.

You may inherit assets in the UK while living in another country. Those assets could include cash, property, investments, shares or pension benefits, and the tax treatment in your country of residence may not necessarily be the same as it is in Britain.

That is why the first question should not necessarily be:

“Where should I invest my inheritance?”

A better question is:

“What do I want this inheritance to achieve, and what decisions do I need to make before I use it?”

What Should You Do First After Receiving an Inheritance?

Unless there is an immediate legal, tax or financial deadline, you do not necessarily need to decide what to do with an inheritance as soon as you receive it.

There can be considerable value in allowing yourself time to understand what you have inherited and how it changes your overall financial position.

A sensible starting process is:

1. Do not rush into major financial decisions.
2. Establish exactly what you have inherited.
3. Understand the relevant tax and reporting position.
4. Keep records of inherited assets and their values.
5. Decide what you want the inheritance to achieve.
6. Review the inheritance alongside your existing financial plan.

1. Don’t Rush Into Major Decisions

Receiving an inheritance is often connected with bereavement, which is not necessarily the best time to make irreversible financial decisions.

It can be tempting to immediately:

• Buy a property.
• Pay off your mortgage.
• Invest the entire inheritance.
• Make large gifts to children.
• Move money overseas.
• Change your retirement date.
• Make a major purchase.

Some of those decisions may eventually be entirely appropriate.

But unless there is a reason to act immediately, first give yourself the opportunity to understand how the inheritance changes your wider financial position.

If you inherit cash, also consider where substantial amounts are held while you decide what to do. Keeping everything indefinitely in one bank account may not be appropriate, particularly where the amount exceeds the relevant deposit-protection limits.

2. Establish Exactly What You Have Inherited

Not all inheritances arrive as a single cash payment.

You might inherit:

• Cash.
• UK or overseas property.
• Shares.
• Investment funds.
• Investment accounts.
• Pension death benefits.
• Business interests.
• Trust interests.
• Personal possessions.
• A combination of several different assets.

Each can create different decisions.

Inheriting £250,000 in cash is very different from inheriting a £250,000 share portfolio or a £250,000 property.

Before changing anything, build a clear inventory showing:

• What you have inherited.
• Where each asset is located.
• Its approximate value.
• The currency in which it is denominated.
• Whether it produces income.
• Whether there are costs or liabilities attached to it.
• Whether you intend to keep or sell it.

3. Understand the Tax Position Before Moving or Selling Anything

This is particularly important for British expats.

For UK purposes, beneficiaries do not usually owe tax simply because they receive an inheritance. Inheritance Tax, where applicable, is normally dealt with by the personal representatives of the deceased’s estate before assets are distributed.

There are circumstances where a beneficiary can become liable, so you should not assume that this will always be the case.

There is also an important distinction between receiving an inherited asset and what happens afterwards.

Once you own the asset, subsequent income or gains can potentially create tax liabilities.

UK Inheritance Tax

Inheritance Tax is normally an issue for the deceased’s estate rather than a tax automatically charged to the person receiving an inheritance.

However, the circumstances of the estate, lifetime gifts, trusts and other arrangements can affect the position.

Income Tax

If inherited cash subsequently generates interest, inherited shares pay dividends or an inherited property produces rental income, that income may be taxable.

Capital Gains Tax

If you later sell an inherited investment, property or another chargeable asset for more than its relevant acquisition value for tax purposes, a taxable gain may arise.

Your Country of Residence

This is where expat inheritance planning can become considerably more complicated.

Your current country of residence may have its own:

• Inheritance or succession taxes.
• Beneficiary reporting requirements.
• Income taxes.
• Capital gains taxes.
• Wealth taxes.
• Rules for foreign property and investment accounts.

Do not assume that because an inheritance has been dealt with correctly in the UK there is nothing further to consider where you live.

Where necessary, obtain appropriate local tax or legal advice before making major decisions.

4. Keep Records of the Value of Inherited Assets

Good record-keeping can become extremely important later.

If you inherit investments, shares or property and eventually sell them, you may need to establish how much their value has changed since you inherited them.

Keep copies of relevant:

• Estate valuations.
• Probate documentation.
• Investment statements.
• Share valuations.
• Property valuations.
• Correspondence from executors or administrators.
• Tax documentation.
• Evidence of subsequent costs or improvements where relevant.

5. Decide What You Want the Inheritance to Achieve

Once the immediate administrative and tax issues have been considered, the most important financial-planning question is:

What would make the biggest positive difference to your life?

An inheritance might be used to:

• Build or strengthen an emergency fund.
• Repay expensive debt.
• Reduce or repay a mortgage.
• Improve retirement security.
• Allow you to retire earlier.
• Invest for long-term growth.
• Fund children’s education.
• Help children onto the property ladder.
• Purchase a home.
• Create greater financial independence.
• Support other family members.
• Make charitable gifts.
• Provide a future inheritance for the next generation.

There is no reason why the inheritance has to serve only one objective.

A substantial inheritance can often be divided between several priorities.

What Should You Do With an Inheritance?

The appropriate priority depends on your existing financial position.

These are planning considerations rather than automatic recommendations. Your priorities should reflect your own circumstances.

Should You Pay Off Your Mortgage With an Inheritance?

Paying off a mortgage can be extremely attractive.

It can reduce monthly expenditure, remove interest costs and provide the psychological benefit of owning your home without mortgage debt.

But it should not automatically be the first decision you make.

Consider:

• Your mortgage interest rate.
• Any early repayment charges.
• How much accessible cash you would have afterwards.
• Your emergency fund.
• Other higher-cost debts.
• Your retirement position.
• Other financial objectives.
• Whether you expect to move home.

Using virtually all of an inheritance to clear a mortgage could leave you property-rich but with insufficient liquid assets for other objectives.

Should You Invest Your Inheritance?

Possibly, but not necessarily all of it.

Before investing, establish when you may need the money.

Money intended for a house purchase in two years has a very different purpose from money intended to support your retirement in 15 years.

Short-Term Money

Money that may be needed relatively soon will generally require a greater emphasis on accessibility and capital stability.

Medium-Term Money

The appropriate approach will depend on the objective, time horizon and how much short-term loss you could tolerate without disrupting your plans.

Long-Term Money

If some of the inheritance is genuinely intended for long-term objectives, an appropriately diversified investment strategy may become relevant.

The key point is that the investment should follow the objective—not the other way around.

Should You Invest an Inheritance All at Once?

If you decide that part of the inheritance should be invested for the long term, another question naturally follows:

Should you invest it immediately or gradually?

There is no answer that is appropriate for everyone.

Investing a lump sum gives the money immediate exposure to investment markets, while investing gradually can reduce the emotional impact of committing a substantial inheritance on a single date.

The appropriate approach depends on factors including:

• Your objectives.
• Time horizon.
• Attitude to risk.
• Capacity for loss.
• Existing investments.
• The size of the inheritance relative to your existing wealth.
• How comfortable you would be with an immediate market decline.

The most important decision comes before either approach: establish what portion of the inheritance genuinely belongs in a long-term investment portfolio.

Why Inheritance Planning Is Different for British Expats

A British resident receiving a British inheritance may already face several financial decisions.

Living overseas can add another layer.

What If You Inherit UK Property While Living Abroad?

Inheriting property creates several decisions beyond simply whether you like the property.

You may need to decide whether to:

• Keep it.
• Use it yourself.
• Rent it out.
• Sell it.
• Hold it for a future return to Britain.

Each option can have different financial and tax consequences.

For UK purposes, you do not generally pay Stamp Duty, Income Tax or Capital Gains Tax merely because you inherit a property.

However, if you subsequently rent the property, the rental income can be taxable. If you later sell a property that is not your main home and it has increased in value, Capital Gains Tax may also need to be considered.

As an overseas resident, you may additionally have reporting or tax obligations where you live.

What If You Inherit Shares or Investments?

You do not have to keep an inherited portfolio simply because the person who left it to you owned those investments.

The portfolio may have been appropriate for:

• Their age.
• Their risk tolerance.
• Their tax position.
• Their income requirements.
• Their country of residence.

None of those circumstances necessarily applies to you.

Before retaining or selling inherited investments, consider:

• What the investments actually contain.
• How concentrated the portfolio is.
• The level of investment risk.
• Costs.
• Tax consequences of selling.
• Your own existing portfolio.
• Your country of residence.
• Your objectives for the inheritance.

The objective should be to decide whether the inherited investments fit your financial plan, not whether they fitted someone else’s.

What If You Inherit a UK Pension?

Pension death benefits require particular care because their tax treatment is different from simply inheriting cash, property or an ordinary investment account.

The position can depend on factors including:

• The type of pension.
• The type of death benefit.
• The age of the person when they died.
• How the benefit is taken.
• The beneficiary’s circumstances.
• The date of death.

Do not assume that an inherited pension is automatically free from all tax.

Pension death benefits can also interact with Income Tax rules, so the overall position should be established before deciding how benefits are taken.

Could an Inheritance Allow You to Retire Earlier?

For someone approaching retirement, an inheritance can materially change the numbers.

It could potentially:

• Reduce the amount you still need to save.
• Increase your retirement income.
• Allow you to clear a mortgage before retirement.
• Provide a larger emergency reserve.
• Bridge the period before State Pension begins.
• Allow you to retire earlier.
• Provide greater flexibility over investment risk.

But the fact that your wealth has increased does not automatically mean you can safely stop working immediately.

Recalculate your retirement position using:

• Your expected retirement expenditure.
• Existing pensions.
• Investments.
• State Pension.
• The inheritance.
• Inflation.
• Investment assumptions.
• Tax.
• Longevity.
• Your intended retirement country.

If you are in your 50s, see my guide to how much you should save for retirement at 50 as a British expat.

What If You Don’t Need the Inheritance?

Some people receive an inheritance when they are already financially secure.

In that situation, the question may shift from:

“How can this money improve my financial security?”

to:

“What do I ultimately want this money to achieve?”

You might consider:

• Helping children or grandchildren.
• Education funding.
• Helping with property purchases.
• Making charitable gifts.
• Retaining the assets for your own future care or security.
• Passing wealth to future generations.

However, gifting substantial assets can have tax, legal and estate-planning consequences in both the UK and your country of residence.

Do not make large gifts solely because you personally do not need the inheritance without first understanding the implications.

Receiving an Inheritance Should Trigger a Review of Your Own Estate

An inheritance increases your wealth, sometimes substantially.

That means an estate plan which was perfectly sensible before receiving the inheritance may no longer reflect your circumstances.

Consider reviewing:

• Your will.
• Your intended beneficiaries.
• Pension nominations.
• Powers of attorney or equivalent arrangements.
• How property is owned.
• Any existing trusts.
• Your records of accounts and assets.
• Digital assets.
• Cross-border succession arrangements.
• Where important documents are stored.
• Whether your executors or family know how to locate them.

For British expats, estate planning can span more than one legal and tax system, so appropriate specialist legal and tax advice may be required.

Common Mistakes People Make After Receiving an Inheritance

1. Making Major Decisions Too Quickly

Bereavement and major financial decisions are not always a good combination. Unless action is required, give yourself time to establish what you actually want.

2. Leaving a Large Cash Inheritance Indefinitely in One Account

Temporary cash holdings can be entirely sensible, but substantial balances should be reviewed for security, deposit protection, currency exposure and longer-term suitability.

3. Investing Before Establishing Your Objectives

Your investment strategy should follow your financial objectives rather than determine them.

4. Assuming There Can Be No Further Tax Because the Estate Dealt With UK Inheritance Tax

Subsequent income and gains can create tax liabilities, and British expats may also have obligations in their country of residence.

5. Ignoring the Rules Where You Live

UK treatment is only part of the picture for someone resident overseas.

6. Failing to Keep Valuation Records

Those records can become important when inherited investments, shares or property are eventually sold.

7. Converting a Large Foreign-Currency Inheritance Without a Plan

Currency decisions should reflect where and when the money is likely to be spent rather than simply today’s exchange rate.

8. Paying Off Debt Without Considering Liquidity

Becoming debt-free can be attractive, but do not leave yourself without sufficient accessible capital for emergencies and other objectives.

9. Taking Excessive Investment Risk

An inheritance is not “free money”. Once it belongs to you, losses affect your financial security just like losses on wealth you accumulated yourself.

10. Making Large Gifts Without Understanding the Consequences

Gifting rules can be complicated, particularly when more than one country is involved.

11. Forgetting to Recalculate Your Retirement Plan

A substantial inheritance may materially change how much you need to save and when you could potentially retire.

12. Failing to Review Your Own Estate Plan

Receiving an inheritance can significantly increase the size of your estate and may change who you want to benefit from it.

The Bottom Line

An inheritance can create enormous financial opportunities, but the best use of the money will depend on what you already have and what you want your financial future to look like.

The starting point is not choosing an investment.

It is understanding the inheritance, identifying any tax and cross-border issues and deciding what the money needs to achieve.

For British expats, add country of residence, local taxation, currency exposure and future plans to move country to that process.

You do not have to make every decision immediately.

Taking the time to build a coherent plan can help turn an unexpected transfer of wealth into something that supports you and your family for many years to come.

Frequently Asked Questions About Receiving an Inheritance

What should I do first when I receive an inheritance?

First establish exactly what you have inherited and whether there are any immediate tax, legal or administrative issues. Unless action is required, avoid rushing into major investment, property, gifting or debt-repayment decisions until you understand how the inheritance fits into your wider financial position.

Do I pay tax when I receive an inheritance in the UK?

For UK purposes, you do not usually owe tax simply because you receive an inheritance. Any Inheritance Tax due is normally dealt with by the deceased’s personal representatives before assets are distributed. There are exceptions, and subsequent income or gains generated by inherited assets can also create tax liabilities.

Do British expats pay tax on a UK inheritance?

There is no single answer because the position can depend on the estate, the assets inherited and the rules in the beneficiary’s country of residence. The UK may not charge the beneficiary simply for receiving an inheritance, but the country where the beneficiary lives may have different inheritance, succession or reporting rules.

Do I need to declare a UK inheritance if I live abroad?

That depends on the rules in your country of residence and the type of asset inherited. Some countries impose inheritance or succession taxes or require foreign inheritances to be reported. Obtain local tax or legal advice where necessary rather than assuming UK treatment applies overseas.

Should I invest an inheritance immediately?

Not necessarily. First decide how much of the inheritance may be required for emergencies, debt repayment, property, family commitments or other shorter-term objectives. Only capital genuinely intended for longer-term objectives should normally be considered for a long-term investment strategy.

Where should I keep inheritance money while deciding what to do?

The priority is normally security, accessibility and an appropriate level of deposit protection while decisions are being made. The most suitable arrangement depends on the amount, currencies involved, where you live and how soon you expect to use the money.

Should I pay off my mortgage with an inheritance?

It can make sense, but consider your mortgage rate, early repayment charges, emergency reserves, other debts, retirement plans and need for accessible capital first. Paying off a mortgage is not automatically the best use of every inheritance.

Should I invest an inheritance or keep it in cash?

It does not need to be one or the other. Money required in the short term may need to remain accessible, while capital intended for long-term objectives may potentially be invested. The appropriate split depends on your objectives and circumstances.

Can I put inheritance money into a pension?

Receiving an inheritance does not itself automatically create additional pension contribution capacity or tax relief. Pension contribution limits, relevant earnings, residence and other rules still need to be considered before contributing substantial amounts.

Can an inheritance help me retire early?

Potentially. A substantial inheritance may increase your retirement assets, reduce debt or provide capital to bridge the period before pensions become available. Your retirement plan should be recalculated before deciding whether an earlier retirement is sustainable.

What happens if I inherit UK property while living abroad?

You will need to decide whether to keep, rent or sell the property. UK tax may arise on future rental income or a later disposal, while your country of residence may also impose tax or reporting requirements.

What happens if I inherit shares?

You do not normally pay UK Income Tax or Capital Gains Tax simply because you inherit shares. Dividends received after inheritance may be taxable, and Capital Gains Tax can potentially arise if you later sell shares that have increased in value since the relevant inherited value.

What happens if I inherit a UK pension?

The treatment depends on the pension, the type of death benefit, the age of the deceased, how benefits are taken and the date of death. From 6 April 2027, most unused pension funds and pension death benefits will also be included in the deceased’s estate for UK Inheritance Tax purposes, subject to specified exceptions.

Should I give some of my inheritance to my children?

Possibly, if doing so fits your objectives and you can afford to give the assets away. However, substantial gifts can have tax and estate-planning consequences, particularly for British expats whose family finances span several countries.

Should I update my will after receiving an inheritance?

Yes, a substantial inheritance is a sensible trigger for reviewing your estate plan. Your wealth, beneficiaries and objectives may have changed, and British expats may also need to consider cross-border succession arrangements.

Further Reading

• Emergency Fund for Expats – How much accessible cash British expats should consider keeping for unexpected expenses.
• How Much Should I Save for Retirement at 50? – Assess whether your existing pensions, investments and savings are on track for retirement.
• How Should British Expats Invest a Bonus? – A useful framework for deciding how additional capital can fit into your wider financial plan.
• Cross-Border Financial Advice – Financial planning when your assets, pensions and future plans span more than one country.
• Returning to the UK – Financial considerations if you expect to return to Britain after living overseas.
• Are UK Pensions Now Liable for Inheritance Tax? – A detailed explanation of the changing UK pension inheritance rules.

Official Resources

• GOV.UK – Tax on Property, Money and Shares You Inherit – Official guidance on the UK tax treatment of inherited assets.
• GOV.UK – Inheritance Tax – Information on how UK Inheritance Tax works, thresholds, exemptions and responsibilities.
• GOV.UK – Applying for Probate – Guidance on the legal authority required to deal with someone’s estate after death.
• HMRC – Inheritance Tax on Pensions – Technical information about the pension Inheritance Tax reforms taking effect from 6 April 2027.