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From 6 April 2025, the UK replaced the domicile-based IHT system with a residence-based system. Anyone who has been UK resident for 10 of the last 20 tax years is a 'long-term UK resident' and faces IHT on their worldwide estate — not just UK assets.
These rules interact with double taxation treaties, settled property and a set of transitional provisions, and the detail sits in HMRC's own manual at IHTM47000. This guide sets out the principles rather than the whole of it. See also our related guide on IHT for non-UK domiciles: the new rules from April 2025.
Under the rules that applied until 5 April 2025, liability to UK IHT depended on the concept of domicile — broadly, the country a person considered their permanent home. A person with a non-UK domicile (a "non-dom") was only subject to UK IHT on assets located in the UK ("UK-situs assets"). Their overseas assets fell entirely outside the UK IHT net, regardless of how many years they had lived in the UK.
There was a separate concept of "deemed domicile": a non-dom who had been UK resident for at least 15 of the previous 20 tax years was treated as UK domiciled for IHT purposes. But even this broader rule left many long-term UK residents outside the worldwide IHT net.
From 6 April 2025, the concept of deemed domicile for IHT is replaced by the concept of being a "long-term UK resident." The key test is residence, not domicile.
A person becomes a long-term UK resident if they have been UK resident for at least 10 of the 20 tax years immediately preceding the relevant date (e.g. the date of death). Once that threshold is crossed, they are subject to IHT on their worldwide assets — not just UK assets.
Residency for this purpose follows the UK statutory residence test (SRT), which looks at the number of days spent in the UK and connecting factors. For most people, being physically present in the UK for 183 days or more in a tax year makes them UK resident for that year.
Becoming non-resident does not end worldwide IHT exposure straight away. Someone who has become a long-term UK resident stays one for a set number of tax years after leaving, and the length of that tail scales with how long they were here:
Ten consecutive tax years of non-residence ends long-term UK resident status entirely. Someone who then returns to the UK starts the 10-of-20 count again from scratch.
Non-UK domiciled individuals who have been UK resident for fewer than 10 of the last 20 years are still only subject to UK IHT on UK-situs assets. Their worldwide assets remain outside the UK IHT net. For many recently arrived international residents, the position has not materially changed.
Under the old rules, a person domiciled in (say) France who had been UK resident for 14 years would only be subject to UK IHT on UK assets — their French house, Swiss bank accounts, and Italian investments would be outside the UK IHT net. Under the new rules, after 10 years of UK residency, their worldwide assets fall into the UK IHT net.
The threshold drops from 15 of the last 20 years (under deemed domicile) to 10 of the last 20 years. Many non-doms who were not previously caught by deemed domicile will now be long-term UK residents for IHT purposes.
A common planning structure for non-doms was the "excluded property trust" (EPT): a non-UK domiciled person could settle non-UK assets into a trust before becoming deemed domiciled, and those assets would then remain outside UK IHT even after the individual became deemed domiciled.
The reform changed what that status now turns on. From 6 April 2025 the question is whether the settlor is a long-term UK resident at the time of the chargeable event, not what their domicile was when the settlement was made. Non-UK property in a settlement is therefore excluded property while the settlor is not a long-term UK resident, and stops being so if and when they become one.
Settlements that already held such property immediately before 30 October 2024 keep a set of transitional protections for it. HMRC's manual describes them: that property is not caught by the gift with reservation of benefit rules; there is no charge when a qualifying interest in possession in it ends or on the death of the beneficiary holding that interest; and relevant property charges on it are capped at £5m per ten-year cycle.
The UK has estate duty or IHT treaties with a number of countries including the USA, France, India, Pakistan, and others. These may provide relief or credit where both the UK and a foreign country seek to tax the same assets. With the new residence-based system, the interaction with double tax treaties becomes more important for affected individuals.
Where no treaty exists, HMRC will apply UK IHT to worldwide assets of long-term UK residents, and the foreign country may also tax those same assets under its own succession laws. Double taxation relief may be available as a credit in the UK for foreign taxes paid.
Everything turns on a single date: the tax year in which the 10-of-20 threshold is crossed. Establishing it means working through UK residence for each of the previous 20 tax years under the statutory residence test. HMRC reports long-term UK residence on form IHT401a, which replaced the domicile form for deaths in scope of the new rules.
Before someone is a long-term UK resident, only UK-situs assets are in charge, so where an asset is located determines whether it is taxable at all. Once the threshold is crossed, the whole worldwide estate is in charge and the location of an asset no longer affects UK IHT liability — though it may still affect what a foreign country charges.
The same IHT planning tools available to UK domiciliaries are now relevant for long-term UK residents:
Someone who ceases to be UK resident before the 10-of-20 threshold is crossed never becomes a long-term UK resident, so no tail period applies to them. Whether a departure counts is a question of the statutory residence test rather than of intention, and years of residence before a departure still count towards the 20-year window on any return.
Transfers between spouses and civil partners are normally exempt without limit. Where the transferor is a long-term UK resident and the recipient spouse is not, the exemption is capped at the level of the nil-rate band in force at the date of the transfer — £325,000 (IHTA 1984 s.18(2)). Anything above that is a chargeable transfer.
The recipient spouse can make a spousal long-term UK residence election to be treated as a long-term UK resident for IHT. That removes the cap, but it also brings their worldwide assets into UK IHT. HMRC sets out who can elect, when, and how, at IHTM47031 to IHTM47041 — including the transitional treatment of spousal domicile elections made before 6 April 2025, which continue to have effect.
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