Living Abroad or Returning to the UK? How Inheritance Tax Rules Could Affect Your Estate

The way the UK taxes overseas assets for Inheritance Tax purposes changed on 6 April 2025. For expats and families with assets in more than one country, how long you have been a UK resident now matters far more than before.

What changed?

Previously domicile played a significant role in deciding whether someone’s overseas assets could fall within the scope of UK Inheritance Tax.

Since 6 April 2025, the key question is no longer where you are domiciled, but how long you have been a UK resident.

Broadly, if you have been a UK tax resident for at least 10 of the previous 20 tax years, you may be classed as a long-term UK resident. This can bring overseas assets within the scope of UK Inheritance Tax.

For internationally mobile families, this means nationality or where you consider home to be does not necessarily tell you what your tax position is.

When do overseas assets come into question?

If you are a long-term UK resident, your worldwide estate may be relevant for UK Inheritance Tax purposes. That can include overseas property, investments, bank accounts and other assets held outside the UK.

This is particularly important for someone who moved to the UK several years ago while retaining property or investments abroad. Those assets may once have sat outside the UK Inheritance Tax regime, but that position can change as your UK residence history builds.

UK assets can still remain within the scope of Inheritance Tax regardless of whether you are classed as a long-term UK resident.

What if you leave the UK?

Moving abroad does not necessarily remove overseas assets from the UK Inheritance Tax regime straight away.

Once you have become a long-term UK resident, you can remain within scope for a period after leaving the UK. Depending on your previous residence history, this can last between three and ten tax years.

For example, someone who has lived in the UK for many years before retiring overseas should not assume that moving abroad immediately removes their foreign property and investments from UK Inheritance Tax.

Do trusts need reviewing?

Yes, particularly where a trust holds assets outside the UK. The new rules can affect whether overseas trust assets fall within the UK Inheritance Tax regime, and the position can depend on the residence status of the settlor and when the trust was created.

Anyone with an existing offshore trust should review the arrangement rather than assuming its previous tax treatment will continue.

Do your current arrangements still work?

These changes are particularly relevant if you have recently moved to the UK, are planning to leave, have returned after living abroad or own significant assets in more than one country.

They may also matter where family members live in different jurisdictions, where property is held overseas or where existing Wills and trusts were put in place under the old domicile rules.

In those circumstances, it is worth reviewing the estate as a whole rather than looking at UK and overseas assets separately.

For families with assets or connections in more than one country, understanding your residence position is now an important part of estate planning.

mlplaw’s Private Client team can help you review your Wills, assets and wider estate planning arrangements.