Inheritance tax for Brits abroad: the 2025 rules

Moving abroad no longer means arguing about domicile. Since 6 April 2025, the question is simpler: how many of the last 20 tax years were you UK resident?

The short version

From 6 April 2025, UK inheritance tax (IHT) on non-UK assets depends on being a "long-term UK resident", not on domicile. Broadly, that means UK resident for at least 10 of the 20 tax years before the year of death or the gift [1][2].
When a long-term resident leaves, IHT on worldwide assets follows them for a "tail" of between 3 and 10 tax years, depending on how long they lived in the UK [3].
UK assets, such as a house in Swindon or a UK bank account, stay within UK IHT wherever you live and however long you've been away [1].
The headline numbers haven't moved: a £325,000 nil-rate band and a 40% rate, with the nil-rate band unchanged for 2026/27 and 2027/28 [4][5].
Tax treaties with a handful of countries still use the old idea of domicile, so the old word hasn't vanished entirely [2].

What changed in April 2025

For decades, UK inheritance tax followed domicile, a sticky legal concept. Most Brits were born with a UK "domicile of origin" and kept it unless they could prove they'd settled abroad for good, intending never to return. Plenty of retirees on the Costa del Sol assumed they'd shed it. HMRC, after a death, often disagreed. It was a bit of a minefield, and the executors were the ones left standing in it.

From 6 April 2025 that's gone for IHT. The new test is mechanical. You are a long-term UK resident in a tax year if you were UK resident under the Statutory Residence Test for at least 10 of the 20 tax years immediately before it [2]. GOV.UK's guidance puts it as being UK resident for "a total of 10 years or more within the previous 20 years" [1].

If you are a long-term UK resident, your worldwide estate is in scope: the villa in Portugal, the Australian super fund balance, the Canadian brokerage account. If you aren't, only your UK assets (and some trust property) are [1].

Domicile still matters in three places: deaths and gifts before 6 April 2025, some older trust charges, and the few double taxation conventions that are written around domicile [2].

The tail: how long IHT follows you after you leave

This is the bit that catches people out. Leaving the UK doesn't switch off worldwide IHT straight away. HMRC's manual sets out how many tax years of non-residence it takes before you drop out of long-term residence [3]:

UK-resident years out of the last 20	Years the tail lasts after you leave
10 to 13	3
14	4
15	5
16	6
17	7
18	8
19	9
20	10

So a lifelong Brit who leaves at 60 after living in the UK every year of their adult life has the full 10-year tail. If they died abroad in year six, their worldwide estate would still be in the UK IHT net. Someone who had worked abroad on and off, with only 12 UK-resident years in the last 20, would be out after three.

The reset after 10 years away

Once you've been non-resident for 10 consecutive tax years, the test resets. Even if you then come back, only your year of return and later years count towards building up long-term residence again [1][3]. HMRC notes this lines up with the 10 years of non-residence needed for the four-year foreign income and gains regime for people arriving or returning.

People who had already left before April 2025

The transitional rules are worth reading slowly, because they help some long-standing expats [6]:

UK-domiciled under the old rules, left years ago. The new 10-of-20 test simply applies from 6 April 2025. HMRC's own example is someone who left in 2009/10: by 2025/26 they're not a long-term UK resident, and their non-UK assets are outside IHT while they stay away [6].
Non-UK domiciled, non-resident in 2025/26. If you weren't domiciled or deemed domiciled on 30 October 2024 and you're non-resident for 2025/26, you're not a long-term UK resident [1][6].
Deemed domiciled on 30 October 2024 and non-resident in 2025/26. You stay in scope only until the start of your fourth year of non-residence, so a three-year tail, unless you come back [1][6].

If you return to the UK, the normal test applies again from 2026/27 [6].

UK assets never leave the net

Whatever your residence status, UK-situated assets are within UK IHT. That usually means [1]:

UK property, including a buy-to-let you rent out through the Non-Resident Landlord Scheme
money in UK bank and building society accounts
shares in UK companies and UK-held investments
personal belongings kept in the UK

From April 2027, unused pension funds and death benefits are due to come into IHT too. If that matters to you, check the current position on GOV.UK before relying on any figure, as the details have been through consultation.

The nil-rate band is £325,000, and anything above it is usually taxed at 40%, or 36% if you leave at least 10% of the net estate to charity [4]. A residence nil-rate band can lift the threshold to £500,000 when a home goes to children or grandchildren [4]. HM Treasury's Budget rates annex lists the nil-rate band at £325,000 for both 2026/27 and 2027/28 [5].

Married to someone who isn't a long-term UK resident

Gifts between spouses and civil partners are normally exempt from IHT. But if you're a long-term UK resident and your spouse isn't (common for Brits who married abroad), the exemption is capped at the nil-rate band in force at the time, currently £325,000, counting earlier gifts too [7]. Anything above that is treated as a potentially exempt transfer.

The non-long-term-resident spouse can elect to be treated as a long-term UK resident, which gives back the full spouse exemption but brings their own worldwide assets into UK IHT. The election can't be revoked and only falls away after 10 consecutive years of non-residence [8]. It's a proper decision for a specialist, not something to tick on a form over a cuppa.

What to do now

Count your UK-resident tax years. Go back 20 tax years and mark each one resident or non-resident under the Statutory Residence Test. Split years count as resident years.
Work out your tail. Use the table above to see when (if ever) worldwide IHT stops following you.
List UK and non-UK assets separately. UK assets stay in the net; non-UK ones drop out once you're past the tail.
Check for a treaty. The UK has IHT treaties with only a small number of countries. If you live in one, domicile may still decide who taxes what [2].
Look at your wills. A UK will and a local will that clash are a gift to probate lawyers. Get a solicitor in each country to look at both.
Talk to someone who knows both systems. Many countries have their own inheritance or succession taxes, and some charge the person who inherits rather than the estate. A tax adviser who knows both countries can check your situation.

Lots of people in our community groups for Brits abroad are working through the same questions, usually after a family funeral made it real.

Common mix-ups

"I sold the house, so I'm out of UK IHT." Not if you're still within your tail. Selling UK property removes a UK asset; it doesn't end long-term residence.
"I've lived abroad 30 years, so I'm safe." For non-UK assets, very likely, under the new test [6]. For UK assets, no: they're always in.
"My new country has no inheritance tax, so nothing's due." The UK still looks at UK assets, and at worldwide assets while your tail runs.
"Domicile doesn't exist any more." It does for treaty purposes and for deaths before April 2025 [2].

Inheritance tax for Brits abroad: residence, not domicile, now decides