Inheritance tax and long-term residence

From 6 April 2025, UK inheritance tax stopped depending on domicile and started depending on long-term residence. Once you have been UK tax resident for 10 of the previous 20 tax years, your worldwide estate comes into the UK inheritance tax net, at 40% above the available allowances. For wealthy families moving to the UK, this sets a clock running from the day you arrive, and the planning window is widest before you come.

At a glance

The test	UK resident for 10 of the previous 20 tax years, or the previous 10 consecutive years
Before you meet it	Inheritance tax applies to UK assets only
After you meet it	Inheritance tax applies to worldwide assets
Rate	40% on death above the available nil rate bands
Nil rate band	£325,000 per person, plus a residence nil rate band of up to £175,000 when a home passes to direct descendants
After leaving the UK	Status continues for a “tail” of 3 to 10 tax years, depending on how long you were here
Trusts	Can be brought into charge by the settlor’s status; take advice

How the test works

You are a long-term UK resident in a tax year if you were UK tax resident (under the Statutory Residence Test) in either:

• at least 10 of the 20 tax years immediately before it, or
• each of the 10 consecutive tax years before it.

For a newcomer, that typically means your worldwide estate comes within UK inheritance tax at the start of your 11th tax year of residence. A split tax year counts as a year of residence.

Before that point, only UK-situated assets are in scope: UK property, UK company shares, UK bank accounts and similar. That includes UK residential property held through overseas companies or structures.

The tail when you leave

Long-term residence does not end the day you leave. It continues for a number of tax years depending on how long you were resident:

Years of UK residence (out of the last 20)	Tail after leaving
10 to 13	3 tax years
14	4 tax years
15	5 tax years
Each further year	One more year, up to a maximum of 10

So someone who lives in the UK for 12 years and then leaves remains in the worldwide inheritance tax net for 3 further tax years. If you come back after 10 consecutive years of non-residence, the count resets.

Trusts

Trusts are where the new rules bite hardest. Overseas assets in a trust you set up or added to can be within inheritance tax when you are a long-term resident, including the ten-yearly and exit charges that apply to relevant property trusts. Transitional protection applies to some trusts set up before 30 October 2024 by people who were not UK domiciled. If you are the settlor or a beneficiary of any trust, ask the trustees to take advice before you move, and tell them when your long-term residence status changes.

Spouses

Gifts between spouses and civil partners are normally exempt. If the recipient spouse is not a long-term UK resident while the giver is, the exemption is limited to £325,000 unless the recipient elects to be treated as a long-term resident. Couples with different residence histories should plan their wills accordingly.

Planning before and after arrival

• Map your estate into UK and non-UK assets now, and keep the record up to date.
• Use the first decade. Gifts of non-UK assets made before you become a long-term resident are outside UK inheritance tax. Lifetime gifts while long-term resident can still be exempt if you survive 7 years.
• Review trusts before you arrive, while more options are open.
• Think about UK property ownership. UK homes are always within UK inheritance tax, however they are held.
• Check your home country’s rules and any estate tax treaty. The UK has treaties with a small number of countries, including the USA, that can change the outcome.
• Make a UK-valid will, and consider separate wills for assets in other jurisdictions.

Income and gains are taxed under a separate system: see the 4-year FIG regime.

Worked example

Rahul moves from Dubai to the UK in 2026 with a £20 million estate, including a £5 million London home and £15 million in investments abroad.

• From 2026 to 2027 to 2035 to 2036 (his first 10 tax years), only the London home and other UK assets are in scope for inheritance tax.
• From 2036 to 2037, his worldwide estate is in scope.
• If he leaves in 2040 after 14 years, his worldwide estate stays in scope for a further 4 tax years.

Frequently asked questions

Does domicile still matter?

For new arrivals, rarely. Domicile remains relevant only in limited transitional cases, such as some trusts and people who left before April 2025.

Do I need to be a British citizen for this to apply?

No. It depends only on tax residence.

What about pensions?

Unused pension funds are due to be brought into the inheritance tax net from April 2027. Take advice on how this interacts with overseas pensions.

Sources

• GOV.UK: inheritance tax if you are a long-term UK resident
• HMRC manual: long-term UK residence test
• HMRC manual: transitional provisions

Last checked: 4 November 2026 against GOV.UK and HMRC guidance. General information, not tax advice. See our disclaimer.