UK IHT on US IRAs and ROTH IRAs

While researching something else, I was reminded of @Swiss_Danny's post re IRAs and IHT.  Unless I've misunderstood, in his consultation with Blick Rothenberg he established that an IRA is not included in a person's estate for IHT purposes.  Have you read that thread?

Blick Rothenburg confirmed under current rules, IRA are considered pension savings so outside your estate and outside the scope of IHT.  However you need to make sure you have nominated beneficiaries. On death they get Legacy IRAs that have to be drawn down over 10 years max and where the drawdown will be taxable in the UK if taken in regular amounts.

From April 2027 this all changes due to Rachel Reeves bringing pension savings into the scope of the estate and IHT. I need to look into to this situation, but this will likely result in the worst of both worlds ie IHT plus the income tax. Which is a blinking outrage

Blick Rothenburg confirmed under current rules, IRA are considered pension savings so outside your estate and outside the scope of IHT.  However you need to make sure you have nominated beneficiaries. On death they get Legacy IRAs that have to be drawn down over 10 years max and where the drawdown will be taxable in the UK if taken in regular amounts.

From April 2027 this all changes due to Rachel Reeves bringing pension savings into the scope of the estate and IHT. I need to look into to this situation, but this will likely result in the worst of both worlds ie IHT plus the income tax. Which is a blinking outrage

It's a kick in the b@ll@cks.  And worse if, as I think you're alluding to, beneficiaries have to withdraw money from the IRA (incurring income tax) in order to pay an IHT bill.  That's doubly annoying.  Can we hope that the next gov't, hopefully not Labour, will reverse this?

This article may be of interest to readers of this discussion: https://www.everfairtax.co.uk/managing-uk-and-us-pensions/

This article may be of interest to readers of this discussion: https://www.everfairtax.co.uk/managing-uk-and-us-pensions/

Good article, thanks.

This article may be of interest to readers of this discussion: https://www.everfairtax.co.uk/managing-uk-and-us-pensions/

Nice overview of the cross-border pension issues that are often discussed here. Most of the questions don't receive direct answers, which is to be expected, but the IHT paragraph seems pretty definitive ie US IRAs, 401ks etc. would be included in the UK estate for IHT purposes because of the way UK DC accounts are structured with definite beneficiaries. You might try to get around this by leaving the beneficiary designations blank, but that doesn't change anything as the pension administrators are still bound to pass the pensions onto the heirs to the estate.