Since 6 April 2025, UK inheritance tax reaches a person's assets anywhere in the world if they were a long-term UK resident, meaning UK resident for at least 10 of the 20 tax years before the year of death or gift, and reaches only their UK-situated assets if they were not. The tax is 40% on what exceeds the £325,000 nil-rate band (2026/27, frozen to 5 April 2031). The old domicile test ended on 6 April 2025. Correct as at 13 September 2026.
What is the long-term UK residence test?
You are a long-term UK resident in a tax year if you were UK tax resident for at least 10 of the 20 tax years immediately before it, counted under the statutory residence test used for income tax (IHTM47020). A split year counts as a full year of residence.
A person who was not UK resident in 2025/26 and not UK domiciled is caught only if they met the old deemed domicile test: resident for at least 15 of the 20 tax years before the year of charge and for at least one of the four tax years ending with it (IHTM47021). For that transitional group the exposure ends with the third full year of non-residence, rather than running the 3 to 10 year table below.
How long after leaving the UK do foreign assets stay in scope?
Foreign assets stay within UK inheritance tax for between 3 and 10 tax years after a long-term UK resident stops being UK resident, depending on how many of the previous 20 years they were resident for (IHTM47020, IHTA 1984 section 6A). The tail is measured in consecutive non-resident tax years, and coming back resets the count to the ordinary 10 of 20 test.
| Tax years UK resident in the previous 20 | Tax years foreign assets remain in scope after leaving |
|---|---|
| 13 or fewer | 3 |
| 14 | 4 |
| 15 | 5 |
| 16 | 6 |
| 17 | 7 |
| 18 | 8 |
| 19 | 9 |
| 20 | 10 |
Which assets count as UK assets, and which are foreign?
An asset is UK or foreign by where it is situated. Land is where it physically is (IHTM27074); a registered shareholding is situated where its title must be registered (IHTM27121).
Property outside the UK owned by an individual who is not a long-term UK resident is excluded property (IHTA 1984 section 6(1)). Foreign property in a settlement is excluded property while the settlor is not a long-term UK resident (IHTM04271); for property already settled before 30 October 2024, IHTM47022 sets out transitional rules.
What if you leave assets to a spouse who is not a long-term UK resident?
Where the person making the transfer is a long-term UK resident and the receiving spouse or civil partner is not, the spouse exemption is limited to the nil-rate band in force at the transfer, £325,000 for 2026/27, cumulatively across lifetime and death (IHTM11033, IHTA 1984 section 18(2)). Where neither is a long-term UK resident, or the receiving spouse is one, the exemption is unlimited.
The receiving spouse can elect to be treated as a long-term UK resident (IHTM47031). The condition looks at the other spouse's status over a 7 year window: for a lifetime election, the 7 years ending with the date of the election; for a death election, the 7 years ending with the death (IHTA 1984 section 267ZC). A death election by the surviving spouse, or by that spouse's own personal representatives, must be made within 2 years of the death, or longer if HMRC allows (section 267ZD). It cannot be revoked and lapses only after 10 successive tax years of non-UK residence. The cost is that the electing spouse's own worldwide assets come into UK inheritance tax.
How does double taxation relief work when another country taxes the same estate?
Where the UK and another country both tax the same asset, HMRC gives a credit against the UK inheritance tax for the foreign tax paid on that asset, under a treaty where one exists and otherwise under unilateral relief, and the credit cannot exceed the UK tax attributable to that asset (GOV.UK, double taxation relief).
Inheritance tax treaties are in force with the Republic of Ireland (1978), South Africa (1979), the USA (1979), the Netherlands (1980, amended 1996), Sweden (1981, amended 1989) and Switzerland (1995). Older agreements with France, Italy, India and Pakistan date from before 1975, the estate duty era, and work differently; they carry no deemed domicile provision (GOV.UK).
Under unilateral relief HMRC gives credit for tax charged by another country on assets sited there; where the asset is sited in neither or both countries a split-credit formula applies (IHTM27188). Treaties written around common law domicile may still turn on domicile after April 2025 (IHTM47001), which is where advice in the other country is needed alongside.
Do you pay UK tax on an inheritance from abroad?
You do not usually owe UK tax at the time you receive an inheritance because inheritance tax is charged on the estate and not on the person receiving it (GOV.UK). UK inheritance tax may be due from the estate itself if the person who died was a long-term UK resident or held UK assets, and the personal representatives deal with that before distribution.
Once the money or property is yours, a UK resident pays income tax on what it earns, reported on a Self Assessment return (GOV.UK, tax on foreign income), and capital gains tax when it is sold. A beneficiary can owe inheritance tax personally where the deceased gave them a gift within 7 years of death, under the 7 year rule, where the inheritance is put into a trust that does not or cannot pay, or where the personal representatives did not pay before distributing. Where past overseas rent or interest was never declared, the Worldwide Disclosure Facility is the route.
Which forms and deadlines apply when an estate has foreign assets?
An estate with foreign assets worth more than £100,000 cannot be an excepted estate, so the personal representatives file the full IHT400 with schedule IHT417 for the foreign assets, or IHT401 where the person's permanent home was outside the UK. The tax is due by the end of the sixth month after the death, with interest after that. Foreign valuations and tax certificates take time to arrive, so those requests go out first.
Example
Example. A woman moved to London from Portugal in the 2009/10 tax year and has been UK resident every year since. She owns a London flat, a UK bank account and an apartment in Lisbon; she is unmarried and leaves everything to her nephew, so there is no spouse exemption and no residence nil-rate band.
Residence: 2009/10 to 2025/26 is 17 tax years, more than 10 of the previous 20, so on a death in 2026/27 she is a long-term UK resident and the Lisbon apartment is within UK inheritance tax. On the example's values: London flat £500,000, UK savings £100,000, Lisbon apartment £300,000, a worldwide estate of £900,000. £900,000 less the £325,000 nil-rate band is £575,000; £575,000 at 40% is £230,000 before any relief (2026/27).
Relief: Portugal is not on GOV.UK's treaty list, so any Portuguese tax on the apartment is claimed as unilateral relief, and the credit cannot exceed the UK tax attributable to that asset, which is £300,000 divided by the £900,000 estate, multiplied by the £230,000 of inheritance tax: £76,667. The nephew owes nothing on receipt; the estate pays the £230,000, less any credit, by the end of the sixth month after the death.
What to do now
A UK resident with assets abroad can count their tax years of UK residence and list every asset by the country it is held in; our inheritance tax calculator estimates the UK charge on the values entered, though it does not model residence or foreign tax credits.
Someone planning to leave should note the tail runs 3 to 10 years from the first full non-resident year; the count and any treaty are adviser work, and the wider options are on our inheritance tax planning page. A beneficiary receiving from abroad needs an adviser only if the deceased had UK residence ties or made them a gift within 7 years of death.
What we do when an estate or a family has assets abroad
We build a year by year residence history from 2005/06 forward under the statutory residence test. We ask first for dates of arrival and departure, days in the UK for borderline years, and the country where each asset is held and registered.
We then map each asset to the rules: UK-situated or foreign, excluded property or not, and which treaty, if any, applies. Where tax has been paid abroad on the same asset we claim treaty or unilateral relief in the inheritance tax account, with the foreign tax certificate as evidence. We prepare the IHT400 with the IHT417 schedule and work to the end-of-sixth-month payment date.
We advise on the UK tax position only. Where the foreign estate needs a lawyer or accountant in that country, we say so, and if we cannot help we will say so.
Frequently Asked Questions
Not on receipt. The estate pays any UK inheritance tax due, and any tax the other country charges is paid there.
You do not usually owe any UK tax on an inheritance at the time you inherit it, because inheritance tax is charged on the estate, not the recipient (GOV.UK). Keep the foreign estate's paperwork and any foreign tax certificate; interest the money earns once it is in your account is taxable UK income; a gift from the deceased within 7 years of death is one case where you can owe inheritance tax personally.
Yes, on UK-situated assets only, above the £325,000 nil-rate band (2026/27), where the person was not a long-term UK resident. Their foreign assets are excluded property.
Leaving does not end the exposure at once. Foreign assets remain in scope for 3 to 10 tax years after residence ends, depending on how many of the previous 20 years you were resident.
Talk to Chloe Symmonds about assets abroad
The first conversation covers where you have lived since 2005, where each asset sits and who it is meant to pass to. Chloe Symmonds, Senior Manager, handles our inheritance tax and probate work. Call 020 8554 2135, email info@visionconsulting.co.uk or use the contact page.
Vision Consulting is licensed by the ICAEW for non-contentious probate in England and Wales, and we prepare wills, including mirror wills, with the estate position in mind. Contentious matters sit with litigation solicitors.
About Vision Consulting. Vision Consulting is a firm of chartered accountants and registered auditors, regulated by ICAEW, with offices in the City of London (the Gherkin, 30 St Mary Axe), the West End (33 Cavendish Square) and Gants Hill, Ilford. The firm provides year-end accounts, bookkeeping, payroll and tax compliance, including Making Tax Digital and VAT, for individuals, landlords, directors and businesses. Its specialist teams provide audit and assurance (company and charity audits and audit-exemption advice), probate and estate administration (the firm is licensed for non-contentious probate), inheritance-tax and estate planning, HMRC tax investigations and voluntary disclosures, property and landlord taxation, and corporation-tax and company advisory.
By the Vision Consulting team.
This is general information, not advice. Your position depends on your circumstances. Speak to us before acting on anything here.