Transferring wealth across international borders is one of the most common requirements of internationally mobile families, and one of the least well-understood. Whether sending money to a child studying abroad, making a large inter-generational gift, or using a structured trust vehicle to distribute assets across generations and jurisdictions — each approach carries specific legal, tax, and practical requirements that need to be understood before funds move.
Gifting Abroad: UK Tax Implications
From the UK perspective, the key framework governing gifts is the inheritance tax (IHT) rules that apply to Potentially Exempt Transfers (PETs).
What Is a PET?
A Potentially Exempt Transfer is a lifetime gift that will be exempt from IHT if the donor survives for seven years from the date of the gift. If the donor dies within seven years, taper relief applies on a sliding scale:
- Within 3 years of gift: full IHT charge (40% on the amount above the nil rate band)
- 3–4 years: 80% of the full charge
- 4–5 years: 60%
- 5–6 years: 40%
- 6–7 years: 20%
- After 7 years: no IHT on the gift
Large gifts to children or grandchildren abroad are treated as PETs in exactly the same way as gifts to UK-resident recipients. The fact that the recipient is in Dubai, Australia, or Singapore does not change the UK IHT treatment from the donor's perspective.
Annual Exemptions and Small Gift Allowances
The UK's IHT annual exemption allows £3,000 of gifts per tax year to be made outside the PET regime entirely — they are immediately exempt and do not use any of the seven-year clock. Additional smaller exemptions (£250 per recipient, wedding gifts, gifts from normal expenditure out of income) add further capacity for tax-free gifting.
Gifts from Donors Outside the UK IHT Net
Since 6 April 2025 the UK's inheritance tax exposure has been based on residence rather than domicile. Broadly, an individual is a "long-term UK resident" — and so within UK IHT on their worldwide assets — once they have been UK-resident for at least 10 of the previous 20 tax years; those who fall outside this test are within UK IHT only on UK-situs assets. For a donor who is not a long-term UK resident, the PET rules therefore bite only on gifts of UK-situs assets. Overseas assets they gift fall outside UK IHT entirely — though such gifts may be subject to the inheritance/gift tax rules of the donor's or recipient's country.
The Recipient's Position: Is the Gift Taxable for Them?
This is the question that most donors overlook. A gift is received by someone who is tax resident somewhere. Their home country may or may not tax the receipt of gifts.
Countries with no gift tax for recipients (generally):
- UK — recipients do not pay income tax or gift tax on gifts from any source
- UAE — no personal tax at all
- Singapore — no inheritance or gift tax
- Australia — generally no gift tax for individuals (though very large gifts may have capital gains implications in specific circumstances)
Countries where recipient may face tax:
- USA: The US federal gift tax is paid by the donor, not the recipient, but US persons who receive gifts from foreign persons above USD 100,000 per year must report the receipt on IRS Form 3520 (this is a reporting obligation, not a tax, but failure to comply carries significant penalties)
- France: French inheritance and gift tax (droits de donation) applies to gifts received by French residents, even from non-French donors. Rates can reach 45% for large gifts outside direct family lines.
- Spain: Spanish gift tax (impuesto sobre donaciones) applies to recipients resident in Spain. Rates vary by autonomous community and can be significant.
- Germany: Schenkungsteuer applies to gifts received by German residents — allowances exist but can be exceeded by large inter-family gifts.
Practical guidance: Always check the tax position in the recipient's country of residence before making a large gift. A gift that is entirely legal and tax-free from the UK perspective can trigger a significant tax liability for the recipient in France, Germany, or Spain.
International Wire Transfers: Anti-Money Laundering Requirements
Moving large sums of money across international borders through the banking system triggers anti-money laundering (AML) scrutiny. This is not discrimination — it is a legal requirement imposed on all financial institutions under the Financial Action Task Force (FATF) standards, implemented in UK law through the Proceeds of Crime Act 2002 and Money Laundering Regulations.
What triggers scrutiny:
- Transfers above reporting thresholds (in the UK, banks must monitor and report suspicious transactions, not just those above a fixed threshold)
- Transfers to or from high-risk countries (FATF grey-listed or black-listed jurisdictions)
- Patterns inconsistent with the customer's known profile
- Large one-off transfers with unclear purpose
What banks will typically ask for on large transfers:
- Source of funds (where did the money come from?)
- Source of wealth (how did the transferor accumulate the funds overall?)
- Purpose of transfer (what is it for?)
- Recipient relationship (who is the recipient and why are you sending them money?)
Providing clear, accurate documentation at the time of transfer prevents delays. Common documentation:
- For gifts: a gift letter signed by donor and recipient, confirming the amount, the donor-recipient relationship, and that the gift is unconditional; solicitor confirmation if large
- For property purchases: exchange contracts, completion statements
- For investment purchases: investment confirmation documents
- For inheritance distributions: probate documents, executor's confirmation
Banks that are not satisfied with documentation can decline to process the transfer and, in serious cases, report the instruction as a suspicious activity report (SAR). This is not something the customer is informed of — it happens invisibly. Planning ahead with correct documentation avoids this entirely.
Sending Money to Children Abroad: Practical Considerations
One of the most common international wealth transfer scenarios: British parents with grown-up children living abroad, wanting to help financially.
Regular small amounts (university fees, living expenses): Use a multi-currency fintech platform (Wise, Revolut) or a specialist FX broker (Moneycorp, OFX). The difference in FX rates between using your high-street bank and a specialist service can be several percent on each transfer — significant over time. Set up a regular payment and automate it.
Larger gifts (property deposit, business investment, educational endowment): Use a specialist FX broker for the currency conversion — they can offer forward contracts that lock in the current exchange rate for a future transfer, protecting against adverse currency movements between the gift decision and the actual transfer date.
Documenting the gift: For any gift that could potentially be relevant for IHT purposes (i.e., above the annual exempt amount), keep a contemporaneous record of the date, amount, and recipient. This documentation is helpful if an IHT inquiry arises within seven years.
Does the gift affect means-tested benefits? If the recipient is receiving means-tested benefits in their country of residence, a large gift may affect their eligibility. This is unlikely to be relevant for children in their 20s–30s with careers, but worth considering for any recipient receiving income-tested support.
Offshore Trusts as a Structured Vehicle for International Wealth Transfer
For significant inter-generational transfers involving internationally dispersed family members, an offshore trust is a structured and controlled mechanism for wealth transfer.
What an Offshore Trust Does
An offshore trust separates legal ownership (held by the trustee) from beneficial interest (enjoyed by the beneficiaries). The settlor (the person who creates and funds the trust) places assets into the trust. The trustee — a professional trust company in the offshore jurisdiction — administers the trust for the benefit of the beneficiaries, in accordance with the trust deed.
Advantages for international wealth transfer:
- Control: The trustee can distribute income or capital to beneficiaries in multiple countries according to the trust deed and letter of wishes — giving the settlor influence over the timing and destination of distributions even after their death
- Separation of assets from any single jurisdiction's succession law: assets held in trust are generally not subject to the forced heirship rules of any individual country
- Flexibility for beneficiaries in different countries: the trustee can consider each beneficiary's tax position and the timing of distributions to minimise overall tax across the family
- Continuity: the trust survives the settlor's death and can operate across generations under a consistent mandate
Common offshore trust jurisdictions:
- Jersey, Guernsey, Isle of Man — for British-connected families; English law-based; highly regulated
- Cayman Islands, British Virgin Islands — common for global structures; English law-based; lighter regulation
- Malta, Cyprus — EU-based; more accessible for EU-resident beneficiaries; EU regulatory standards
The UK Tax Position of Offshore Trusts
Offshore trusts and UK tax is a technically complex area. Key principles:
- A long-term UK resident settlor (UK-resident for at least 10 of the previous 20 tax years) creating an offshore trust does not escape UK IHT on the trust assets — since 6 April 2025 the relieving "excluded property" treatment for foreign trust assets turns on the settlor's long-term residence status rather than domicile, and IHT entry, ten-year and exit charges can apply
- Income from an offshore trust received by UK-resident beneficiaries is taxable in the UK as their income
- Capital gains within an offshore trust may be attributed to UK-resident beneficiaries under the UK's trust anti-avoidance provisions (Section 87 TCGA 1992)
Offshore trusts are not a mechanism for long-term UK residents to avoid UK tax. They are a mechanism for organising and distributing wealth across international families in a structured, controlled way. The tax advantages, where they exist, are typically for settlors who are not (or not yet) long-term UK residents, or for beneficiaries in low-tax jurisdictions.
When an Offshore Trust Is and Is Not Appropriate
Worth considering for:
- Significant inter-generational wealth (typically £1m+ of assets beyond primary residence)
- Families genuinely spread across multiple countries with different legal systems
- Non-domiciled settlors with significant overseas assets
- Families where succession planning across multiple jurisdictions is complex (business interests in different countries, property in multiple countries)
Not worth considering for:
- Smaller estates where trust administration costs (typically £5,000–£20,000 per annum for professional trustee) outweigh benefits
- Long-term UK residents primarily seeking to reduce UK IHT — the structure does not achieve this reliably
- Anyone without robust professional legal and tax advice in all relevant jurisdictions — a poorly structured trust can create more problems than it solves
Currency Management for Large International Transfers
Any substantial inter-generational wealth transfer involves currency conversion at some point. For a £500,000 gift from UK parents to a child in Australia, the AUD/GBP rate at the time of transfer determines how much the child actually receives in functional spending terms.
Tools to manage currency risk on large transfers:
Forward contracts: Lock in the current exchange rate for a transfer that will happen in 1–12 months. If you know you are going to make a large gift when a property exchange completes, book a forward contract now. Cost: a small bid-offer spread on the rate. Benefit: certainty.
Limit orders: Instruct an FX broker to execute the conversion if the rate reaches a specified target. "Transfer AUD 1,000,000 if GBP/AUD hits 1.95." Useful if the current rate is unfavourable and you are prepared to wait.
Regular transfers over time: If the total gift is to be given in tranches, spreading the FX conversion over months averages out the rate exposure (cost averaging across currency movements).
For transfers over £100,000, using a specialist FX broker (Moneycorp, OFX, Currencies Direct, or a private bank FX desk) rather than a high-street bank typically saves 1–2% on the conversion — materially significant at this scale.
Tax Advice in Both Jurisdictions
This cannot be overstated. Any large international wealth transfer requires qualified tax advice:
- In the donor's country — to understand the IHT/gift tax treatment and compliance requirements
- In the recipient's country — to understand how the receipt is taxed (or not) in their hands
These are different engagements with different advisers. A UK tax adviser may not have expertise in French droits de donation. A French tax adviser may not understand the UK PET framework. Both are needed.
The additional compliance cost of obtaining proper advice in both jurisdictions is almost always small relative to the tax and legal risks of proceeding without it.
How Global Investments Can Help
We help international families structure wealth transfers in a way that is efficient from a tax perspective, practically achievable across borders, and aligned with the family's longer-term estate planning objectives. We coordinate UK and overseas specialists and manage the process so that nothing falls between the cracks.
Contact us to discuss your inter-generational wealth transfer plans.
Tax rules on gifts, inheritance, and trusts are complex, jurisdiction-specific, and subject to change. This article is for general information only and does not constitute legal, tax, or financial advice. Always seek qualified advice in all relevant jurisdictions before making significant international transfers or establishing trust structures.
This article is for general information only and does not constitute financial, legal or tax advice. Rules, prices and regulations change; verify current requirements with a qualified adviser before acting.