Transferring Inherited Funds From Israel to the UK

A retired teacher in Leeds is named in her late uncle's Israeli bank records as his only heir. The balance is about NIS 900,000, sitting in a branch in Netanya she has never visited. She assumes a phone call and a sort code will do it. Six weeks later the bank has still not moved a shekel, and the reason has nothing to do with the money being hers. It is that Israel treats an outbound transfer to a non-resident as three separate legal events at once: an inheritance release, a tax event, and an anti-money-laundering review.

Getting inherited funds from an Israeli account to a British one is very doable. But you clear three gates, in order, and each is run by a different body. Miss the sequence and the bank simply stops, because releasing the wrong way exposes the branch to its own liability. This guide walks a UK heir through all three, from a kitchen table in England.

Gate One: The Succession Order

An Israeli bank will not release a deceased person's balance to anyone, heir or not, without a court-recognised instrument proving who inherits. For an intestate estate that is a succession order (tzav yerusha); where there is a will it is a will execution order (tzav kiyum tzava'a). Both come from the Inheritance Registrar (Rasham HaYerushot) at the Ministry of Justice, or from the Family Court if the estate is disputed.

This is where most UK heirs lose the first month. The application must list every legal heir, attach the death certificate, and be supported by documents that an Israeli registrar will accept from abroad. A British death certificate, a will proved in England, or a grant of probate all need an apostille from the FCDO before Israel recognises them. If any heir signs a consent or waiver, that signature must be notarised and apostilled too.

In Practice: Under Section 72 of the Succession Law 1965, an Israeli bank may release estate funds only against a succession order or will execution order. The application fee to the Inheritance Registrar is roughly NIS 550, plus about NIS 130 for the mandatory newspaper notice, and an uncontested foreign-heir case typically takes three to four months from filing. During that window the account is frozen for withdrawals, though it keeps earning interest.

You do not travel for this. An Israeli lawyer files the application electronically, and you sign the power of attorney and any heir consents in the UK before a notary, then apostille them. If you want the mechanics of releasing a specific account balance, our note on how UK heirs release inherited Israeli bank funds covers the branch-level steps.

Gate Two: The Tax Certificate

Here is the point almost nobody expects. Israel does not levy inheritance tax, and has not since 1981, so the capital you inherit is not taxed on the way out. Yet the bank may still hold back a slice of any outbound transfer to a non-resident, because a foreign-currency payment abroad triggers a general withholding rule, not an inheritance rule.

The bank's compliance desk treats a large transfer to a non-resident as a payment potentially carrying untaxed Israeli income (interest that accrued, for instance) unless the Israel Tax Authority (Rashut HaMasim) tells it otherwise. So it asks for a withholding certificate. With one, the money leaves clean. Without one, the bank protects itself by withholding.

In Practice: Under Section 170 of the Income Tax Ordinance 1961, an Israeli bank may withhold up to 25% from a transfer to a non-resident unless the payee produces a withholding-exemption certificate (ishur nikui mas b'makor) from the Israel Tax Authority assessing office. On a NIS 900,000 transfer that is up to NIS 225,000 held back. The assessing office generally issues the certificate within four to eight weeks once it sees the succession order and a source-of-funds explanation, and any over-withheld amount is later refundable only by filing an Israeli return.

Note the sting in that last line. A withheld amount is not lost, but recovering it means opening a file with the Israeli tax office and waiting, which for most UK heirs is far more painful than getting the certificate first. Sequence matters.

Gate Three: Anti-Money-Laundering Review

Even with a succession order and a tax certificate in hand, the transfer still passes the bank's own AML gate. Israeli banks apply the Bank of Israel's Proper Conduct of Banking Business Directive 411, which sits on top of the Prohibition on Money Laundering Law 2000. For a non-resident receiving a six-figure sum, this is not a formality.

The desk will want to see who you are, where you live, and specifically that the money is what you say it is. Expect to document the source of funds, confirm the assets were declared to the relevant tax authorities, and identify yourself as the beneficial owner. Because you bank in the UK, you will also usually be asked to complete a self-certification of your UK tax residence so the bank can report the account under the Common Reporting Standard. That report reaches HMRC automatically.

None of this should alarm an honest heir. It slows things when documents arrive piecemeal. A single, complete pack, translated where needed, moves faster than a dozen emails.

What HMRC Wants From You

The UK side is lighter than most heirs fear, but it is not nothing.

The inheritance capital itself is generally not taxable in your hands. UK inheritance tax is charged on the deceased's estate and turns on their domicile, so where the person who died was not UK-domiciled and the assets sat in Israel, there is usually no UK IHT and no income tax on the receipt. What becomes reportable is what the money does next.

• Interest earned on the Israeli account between the death and the transfer is UK-taxable income for you once you are entitled to it, and goes on your Self Assessment return.
• Any foreign exchange gain or investment growth after the funds are yours can be a capital gains matter.
• If you keep the Israeli account open rather than closing it, it is a foreign account you may need to report, and the double-tax framework in the UK–Israel tax treaty governs relief so the same income is not taxed twice.

The practical takeaway: the receipt is clean, the aftermath is reportable. Keep the paperwork that shows the money was inherited, because HMRC can ask why a large sum landed in your account and "it was my uncle's estate" needs evidence behind it.

Choosing How the Money Arrives

Once the gates are cleared, you still decide the route. A direct SWIFT transfer from the Israeli bank to your UK bank is simplest but often carries a poor exchange rate and a correspondent-bank fee. Some heirs move the funds through a regulated currency service to improve the rate on a large sum, though that adds an extra account into the AML chain, which can itself invite questions. For a one-off inheritance, a clean bank-to-bank transfer with an agreed rate is usually the calmest choice. The wider mechanics are covered in our guide to international transfers from Israel for non-residents.

Common Mistake: Instructing the Israeli bank to "just send it" before obtaining the tax certificate. The branch, protecting itself under Section 170 of the Income Tax Ordinance, withholds 25% at source. On a NIS 900,000 estate that is up to NIS 225,000 frozen with the Israel Tax Authority, recoverable only by filing an Israeli tax return, which typically adds three to six months and NIS 6,000 to NIS 12,000 in Israeli accountancy and legal fees.

When Several Heirs Share One Account

Split estates add a layer. If your late relative left the balance to three siblings across two countries, the succession order names all three, and the bank will generally not pay one heir their share into a UK account while the others are unresolved. It waits for a distribution instruction signed by everyone, or for the estate to run through an administrator. Time zones and posts between London, Toronto, and Tel Aviv are the real delay here, not the law. Agreeing early who receives what, and in which currency, saves weeks of back-and-forth once the order issues.

Practical Checklist

• Order several apostilled copies of the UK death certificate and, if there is a will, the grant of probate before anything else.
• Appoint an Israeli lawyer and sign a notarised, apostilled power of attorney so nothing requires your physical presence.
• File for the succession order or will execution order with the Inheritance Registrar and expect three to four months uncontested.
• Apply to the Israel Tax Authority for a withholding-exemption certificate before instructing any transfer, not after.
• Prepare a source-of-funds pack for the bank: succession order, ID, proof of UK address, and a short written explanation.
• Complete the bank's CRS self-certification of UK tax residence and keep a copy.
• Decide the transfer currency and route, and confirm the exchange rate in writing before the money moves.
• Retain every document to answer any later HMRC query about the source of the funds.

Speak With an Israeli Attorney

Releasing an Israeli inheritance to a UK account is a sequencing problem more than a legal one, and the order in which you approach the Inheritance Registrar, the Tax Authority, and the bank decides whether it takes three months or ten. An Israeli lawyer can run the entire chain remotely, hold the power of attorney, and stop the bank withholding a quarter of the estate for want of a single certificate.

Contact us for a confidential initial consultation.