Farra is a death administration assistant for UK families. Get step-by-step guidance for registering a death, applying for probate, notifying banks, and managing bereavement admin. From essential documents to practical checklists, Farra simplifies estate paperwork and funeral-related tasks so you can focus on what matters.
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.
Have more questions on UK death administration? Let Farra help.
This is a complex area and the rules interact with double taxation treaties, excluded property trusts, and transitional provisions. This guide sets out the key principles — take specialist advice if you or your estate may be affected. 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.
If you become a long-term UK resident and then leave the UK, you do not immediately escape worldwide IHT. There is a "tail" period: you remain subject to worldwide IHT for a period after leaving. The length of the tail depends on how long you were UK resident — up to a maximum of 10 years after becoming non-resident.
In broad terms, the longer you were UK resident, the longer the tail. This is designed to prevent people from simply leaving the UK shortly before death to avoid IHT on non-UK assets.
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 rules for EPTs have changed alongside the wider reform. In broad terms, EPTs settled before April 2025 when the individual was not UK-deemed domiciled may retain excluded property status, but the detailed rules are complex and specialist advice is essential.
New trusts settled after 6 April 2025 by long-term UK residents will generally not benefit from excluded property treatment.
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.
The first step for any affected individual is to identify precisely when they will hit (or have hit) the 10-year threshold. This requires a careful analysis of UK residency over the previous 20 tax years using the statutory residence test. The date matters: planning opportunities exist before the threshold is crossed, but diminish afterwards.
Before becoming a long-term UK resident, positioning high-value assets outside the UK can reduce the UK IHT exposure on those assets during the tail period. Once the 10-year threshold is crossed, however, it is the worldwide estate that is taxable — location of assets becomes less relevant to UK IHT liability.
The same IHT planning tools available to UK domiciliaries are now relevant for long-term UK residents:
For those approaching but not yet at the 10-year threshold, leaving the UK before reaching it means the tail period (if any) is shorter and the individual never becomes a long-term UK resident. However, this must be weighed against other personal and financial considerations, and any departure must be genuine rather than a temporary move.
Where a UK-domiciled or long-term resident person is married to a non-UK-domiciled person who is not a long-term UK resident, the spousal exemption for transfers between them may be limited. Under current rules, transfers from a UK-domiciled spouse to a non-dom spouse are limited to a cap rather than being fully exempt. An election can be made for the non-dom spouse to be treated as UK-domiciled for IHT purposes, which removes the cap but brings their worldwide assets into the UK IHT net.
From April 2025, IHT liability is based on residence not domicile. Non-doms resident for 10+ years face IHT on worldwide assets under the new long-term resident rules.
BPR changes from April 2026 cap relief at £2.5m combined with APR. What it means for business owners, farms, and AIM portfolios — and what planning still works.
APR changes from April 2026 cap full relief at £2.5m combined with BPR. Essential reading for farmers, landowners, and rural estate planners.
AIM shares lose 100% BPR from April 2026, dropping to 50% relief. What it means for AIM IHT portfolios, existing holdings, and alternatives to consider.
From April 2027, unspent pension funds fall into your taxable estate. Worked examples show the impact and the planning steps that can still reduce the bill.
Your AI companion for UK death administration—combining practical guidance with emotional support, available 24/7.
Your AI companion for UK death administration
Free to start • £129 for full access • 30-day guarantee