Most people who talk to me about leaving the UK ask about income tax and capital gains tax. Hardly anyone asks about inheritance tax. It's the one I'd look at first, because it can follow you abroad for years.
The rule since 6 April 2025
Until that date, whether your overseas assets were caught by UK inheritance tax turned on your domicile. Now it turns on how long you've lived here.
If you've been UK resident for at least 10 of the last 20 tax years, you're a "long-term resident" and UK inheritance tax can apply to everything you own, wherever it is. The 20 years are the ones before the year of death, or before the year of a lifetime gift. A year in which you were only here for part of it, because you arrived or left mid-year, still counts as a full year. Domicile mostly doesn't matter any more, although it still has a small role, for example for events before 6 April 2025 and under some tax treaties.
Leaving doesn't end it straight away
Once you're a long-term resident you stay one for a while after you go. HMRC calls this the tail. How long it lasts depends on how many of the 20 years you were resident:
- 10 to 13 years resident: a tail of 3 tax years
- 14 years: 4 tax years
- 15 years: 5 tax years
- 16 years: 6 tax years
- 17 years: 7 tax years
- 18 years: 8 tax years
- 19 years: 9 tax years
- 20 years: 10 tax years
Here's an example. You've been resident for 15 of the last 20 tax years and 2026/27 is your last year in the UK. Your tail is five tax years, 2027/28 to 2031/32. If you're non-UK resident in every one of those years, you stop being a long-term resident from 6 April 2032. If you die before then, your worldwide estate is still within UK inheritance tax.
A few conditions that catch people out
- The count starts from your last year of UK residence, not the day you left. The tax year you leave in counts as a year of residence, so the tail starts the year after.
- The years abroad have to be consecutive. If you come back before the tail has run out, you're still a long-term resident, as long as you still meet the 10 out of 20 test.
- Ten consecutive years as a non-resident takes you out of the net, even if you return later. You'd only become a long-term resident again by building up 10 years of UK residence in a 20-year period.
- UK assets stay in scope whatever your status. That covers UK land and, subject to conditions, UK homes held through a company or other structure. There are a few exceptions, such as authorised unit trusts and OEICs.
- If you leave before you've been here 10 years, there's no tail at all. You aren't a long-term resident, so your non-UK assets are generally outside UK inheritance tax. Different rules apply if you're under 20, and a spouse election can bring someone in, so check those if they might apply to you.
Different transitional rules apply if you were already non-UK resident in 2025/26, and some tax treaties can change the answer. I haven't covered either here.
What I'd do about it
Start by counting your years. Work out how many of the last 20 tax years you were UK resident, including any part years, and then work out when your tail would end. Most people I speak to haven't done this.
The timing can matter a lot. Between 10 and 13 years of residence the tail stays at three years, so another year here doesn't lengthen it. From the 14th year, every extra year adds a year to the tail. And leaving in your ninth year rather than your tenth could be the difference between having no UK inheritance tax exposure on your overseas assets and having several years of it.
Trusts and gifts need their own advice. The inheritance tax status of non-UK assets in a trust now generally depends on whether the person who set it up is a long-term resident at the time of a charge, not on the position when the trust was created. There are exceptions, including where the settlor died before 6 April 2025. If you're close to leaving, or have recently left, take advice before you set up a trust or make large gifts.
My view
Most of what's been written about the 2025 changes is about the foreign income and gains regime and the temporary repatriation facility. Those matter. But if you're thinking of moving abroad, I think the inheritance tax tail is the part that lasts longest. It comes down to counting years and picking the right time to go, and that's much easier to do before you leave.
How we can help
If you're planning a move, or left in the last few years and want to know where you stand, our IHT health check starts from £595 plus VAT. You can get in touch through our contact form or email us at hello@rmhoconsulting.com.
Best regards,
Rob Osborne BA CTA
Director, RMHO Consulting
www.rmhoconsulting.com
This article is general information and is not advice on your circumstances. The rules are complex and depend on your facts, so please take advice before acting.