Do you pay UK Inheritance Tax on assets abroad?
From 6 April 2025, the UK’s approach to Inheritance Tax (IHT) on assets abroad has changed. The system has shifted from being a domicile-based to a residence-based model.
This means how long you’ve lived in the UK is now what matters, not your legal domicile.
If you’ve inherited property or savings from abroad, or if you own assets abroad yourself, you might be wondering whether the UK will charge Inheritance Tax (IHT) on them. Dealing with an estate can be stressful at the best of times, and taxes only make that more complicated.
To put it simply, the answer depends not so much on where your assets are, but more on how long you have been a tax resident in the UK. If you’ve been a UK tax resident for 10 of the previous 20 tax years, then your non-UK assets are also liable for IHT.
At Provira, we know these conversations are deeply personal. They’re not just about money; they’re about security, family, and making sure your loved ones are looked after. In this guide, we talk through what you need to know so you can move forward with confidence.
However, we would always advise that you speak to a professional about your personal situation, to make sure you are getting the best advice for you.
How does UK Inheritance Tax work?
Inheritance Tax in the UK is currently charged at 40% on the value of an estate above the £325,000 threshold (known as the nil-rate band).
If you leave your home to your children or grandchildren, the nil-rate band increases by another £175,000. What this means is that you can potentially pass on up to £500,000 of assets tax-free.
IHT applies to everything you own at the time of your death. That means your home, savings, investments, art, even your jewellery. But when you also have assets outside of the UK, things seem a little more complicated.
What changed from April 2025?
Before April 2025, your domicile (your legal home) was the factor that determined whether your non-UK assets were liable for IHT. If you were domiciled outside of the UK, only your UK assets were taxed.
However, if you were “deemed domiciled” (meaning you had been a UK tax resident for 15 out of the previous 20 years), your worldwide estate became taxable.
That’s all changing.
From 6 April 2025, the new residence-based test
The problem with the domicile rule was that people could live in the UK for many years and avoid IHT. And whilst it was definitely a benefit for many, HMRC was losing out. And so, just this year, the rules changed.
As of April 2025, if you’ve been a UK tax resident for 10 out of the past 20 tax years, you’re considered a long-term resident, and that means your worldwide assets, including overseas property, savings, and investments, will fall within the scope of UK inheritance tax.
This is a huge shift, especially for foreign nationals living long-term in the UK.
What does this mean for your overseas assets?
So, what does this mean for you?
If you’re classed as a long-term UK resident, any assets you hold abroad, like a holiday home in Spain, a bank account in Dubai, or shares in a US company, could now be subject to UK Inheritance Tax at up to 40% on your death.
Even if you leave the UK now, you may still be within the scope of UK IHT for a number of years. This is called the “inheritance tax tail.”
If you lived in the UK for 10 – 13 years, the tail lasts 3 years.
For each extra year of UK residence, the tail extends by one year, up to a maximum of 10 years.
Only after 10 consecutive years outside the UK does the clock reset.
What about UK assets?
UK assets are always liable for IHT, regardless of where you live, how long you’ve lived there or where you are domiciled. This includes:
- UK residential or commercial property
- UK shares
- UK bank accounts
What if you’re already living outside of the UK?
The good news is that if you’ve already left the UK for a number of years and were not UK domiciled on 30th October 2024, you might still be able to avoid IHT on foreign assets under the old tax rules.
If you were a ‘non-dom’ who left the UK before April 2025 and had not lived in the UK for 15 of the previous 20 years, then your foreign assets won’t be taxed under the UK’s new Inheritance Tax rules. And you won’t have to worry about a “tax tail” either.
However, if you have lived in the UK for 15 years or more by April 2025, then you might have to pay IHT for up to 3 years after you leave. However, this only applies if your last year of residency was between April 2022 and April 2025.
What can you do now to protect your assets abroad?
The good news is that you do have options, but time is ticking.
Review your UK residence history
The 10 out of 20-year rule is important. If you’re close to hitting 10 years of UK residence, now is the time to think about your next steps.
Understand the “tail” if you plan to leave the UK
Even if you move abroad, IHT can still apply for up to 10 years. Planning your exit with this in mind is important.
Prepare your loved ones for an Inheritance Tax bill
If you think your non-UK assets will be liable for IHT, then planning now could be a great move.
At Provira, we offer up to 50% of the value of an estate up front, so your family has the funds ready to pay IHT. Our caring and experienced team can help you access the value tied up in an estate quickly and transparently.
Get in touch with our specialised team to find out more today.
Assets abroad and Inheritance Tax
We understand that talking about inheritance can feel uncomfortable. It’s about more than money, it’s about making sure your loved ones are secure and your estate is planned properly.
Ignoring these changes could leave your family facing unexpected tax bills, legal headaches and more. The more you can prepare now, the better prepared your family will be to move forward with confidence.
Estate advances with Provira
At Provira, we’ve helped hundreds of families work through the complicated and ever-changing landscape of UK Inheritance Tax.
We offer fast, flexible funding to executors so they don’t have to wait months (or even years) to complete probate.
So, whether you’re navigating probate delays, settling expenses or just want financial peace of mind, our Estate Advance gives you early access to up to 50% of your estate value, so you can move forward.
