Floodplain encroachment by embankments heightens flood risk. This is exacerbated by climate change and land-use modifications. This paper assesses the impact of embankments on sediment transport, channel geometry, conveyance capacity, and flood inundation of a reach of the Nakkhu River, Nepal. Using the CAESAR-Lisflood landscape evolution model based on a 2-m digital elevation model, we simulate four flood scenarios with and without embankments and sediment transport: a historical 25-year return period flood event used to design the embankments, 50-year, 100-year, and 1000-year return period flood events forecast using the Generalised Logistic Model (using data from 1992-2017). Our results indicate that flow confinement by embankments reduces inundation by 99% (from 22.5 ha to 0.3 ha) for the historical 25-year flood discharge of 42.23 m³/s and by 15% (from 28.8 ha to 24.4 ha) for the 1000-year return period flood discharge of 95 m³/s (similar to a 25-yr maximum mid-future). The presence of embankments increases downstream sediment transport by more than 32% for all flood scenarios considered. Inclusion of sediment transport leads to a fivefold increase in predicted inundation area for a 25-year maximum mid-future flood compared to the no-sediment case in the embanked channel. Changes in channel geometry due to sedimentation significantly reduce conveyance capacity increasing overtopping flood risk, particularly where the channel is sinuous or located on flat terrain. Our results indicate that sediment erosion in outer meanders may threaten embankment stability by promoting undercuts. It is recommended that sediment transport effects be factored into embankment design and floodplain planning.