From 6 April 2025, the UK moved IHT onto a residence-based footing. The key concept is long-term UK resident (LTR) — not “UK-domiciled”. If you’re an LTR, your worldwide assets can fall within UK IHT. If you’re not an LTR, it’s generally UK-situated assets only.
Who counts as LTR?
You’re an LTR if you’ve been UK-resident for at least 10 of the previous 20 tax years (the normal statutory residence test applies).
Leaving the UK? There’s an IHT “tail”.
If you stop being UK-resident, you stay within UK IHT for a period that depends on how long you were resident — from 3 up to 10 tax years (the full 10-year tail applies if you were resident for 20+ years). Example: resident 10–13 years → tail 3 years; resident 15 years → tail 5 years.
What’s in scope under the new regime?
- LTRs: generally worldwide assets at death/chargeable events.
- Non-LTRs: generally UK-sited assets only (UK property, UK bank/investment accounts, etc.). UK-sited assets are within scope even if you live abroad.
Trusts follow the status
Trust exposure now broadly tracks the settlor’s LTR status, with transitional rules for assets that were already non-UK and settled by non-doms before the change. This is a technical area — timing and situs matter.
What this means in practice
- If you own property or portfolios overseas, assume they may be within UK IHT once you meet the 10/20 LTR test (and possibly for up to 10 years after you leave).
- Double tax can bite where the other country has its own estate/inheritance tax — relief depends on treaties and situs rules. List foreign assets clearly on your personal balance sheet so executors can claim any reliefs correctly.
Practical tip: Don’t rely on old “domicile” assumptions; check your residence history against the 10/20 test (and any post-exit tail).
Call to action: Ask us to map your residence status vs asset locations so you know what’s in and what’s out of UK IHT under the new rules — then your solicitor can align Wills/trusts accordingly.
Back to You are not Immortal – a practical guide to a delicate topic – IHT
