Skip to main content
WUHLD
← Back to insights

Residence-Based IHT Policy: Accounting Implications for Worldwide Estates

· 23 min

Executive Summary

The Finance Act 2025 (c.8), Schedule 13, replaced domicile with the long-term UK resident (LTR) test as the gateway to worldwide Inheritance Tax exposure from 6 April 2025. Accountants managing international estates now confront five interconnected operational challenges absent under the former regime: constructing residence histories spanning up to 39 years for IHT401a compliance; identifying and valuing foreign assets using prescribed exchange rate methodology; monitoring the graduated IHT tail for departing clients over 3 to 10 years; navigating the restricted spousal exemption and election mechanics for cross-border marriages; and managing the "floating" excluded property status of settled property at each trust charging event. With IHT receipts reaching GBP 7.1 billion in the first ten months of 2025-26 and converging reforms to Agricultural Property Relief, Business Property Relief, and pension death benefits, practitioners require a systematic operational framework for worldwide estate compliance under the new regime.

1. The Compliance Landscape: What Has Changed for Worldwide Estates

1.1 The Fundamental Shift

On 6 April 2025, the most significant restructuring of IHT's personal scope since 1975 took effect. Schedule 13 of the Finance Act 2025 replaced the subjective concept of domicile with the objective long-term UK resident (LTR) test as the mechanism determining whether an individual's worldwide assets fall within IHT scope.1 An individual is an LTR if UK tax resident for at least 10 of the 20 tax years preceding the tax year of the chargeable event -- death, chargeable lifetime transfer, or other charge.2 The test applies irrespective of common law domicile, nationality, or any subjective intention regarding permanent home.23

The operational consequence is immediate: worldwide assets of LTRs are within scope of IHT, whilst non-UK assets of individuals who are not LTRs constitute excluded property under IHTA 1984 s.6 (as amended).45 The nil-rate band (NRB) remains frozen at GBP 325,000 and the residence nil-rate band (RNRB) at GBP 175,000 until at least April 2030-31, with the standard IHT rate at 40%.6

1.2 The Revenue Context

IHT receipts reached GBP 7.1 billion in the first ten months of 2025-26 (April to January), GBP 0.1 billion higher year-on-year, following a record GBP 8.2 billion in 2024-25.7 The Office for Budget Responsibility (OBR) forecasts GBP 8.7 billion for the full 2025-26 year.8 HMRC's Customer Compliance teams apply risk assessment processes to new IHT cases (IHTM01030), and the expanding revenue base is driving intensified compliance activity, particularly for estates with cross-border elements.9 Against this enforcement backdrop, the operational precision with which accountants manage worldwide estate compliance carries material professional risk consequences.

1.3 Five Operational Challenges

The LTR test is mechanistically simpler than the domicile assessment it replaced -- 10 years of residence in 20 is more readily determined than subjective domicile of choice. However, the compliance obligations that flow from the new regime are substantially more extensive. Accountants managing worldwide estates face five interconnected challenges:

  1. Residence history construction -- assembling and documenting up to 39 years of residence data for IHT401a
  2. Foreign asset identification and valuation -- locating, valuing, and reporting worldwide assets on IHT400/IHT417
  3. IHT tail management -- monitoring departing LTR clients for 3 to 10 years post-emigration
  4. Spousal exemption navigation -- advising on the restricted GBP 325,000 exemption and election mechanics
  5. Excluded property trust compliance -- managing the "floating" excluded property status at each charging event

Each challenge demands a systematic operational response. The balance of this article addresses each in turn, before examining the convergence with APR/BPR relief caps (April 2026) and pension death benefit inclusion (April 2027) that compounds the compliance burden for worldwide estates.

2. Determining Long-Term UK Resident Status

2.1 The 10/20 Year Test

The LTR test operates as a mechanical count: an individual is an LTR in a tax year if UK tax resident for at least 10 of the 20 tax years immediately preceding the tax year of the chargeable event.2 Split-year treatment under the Statutory Residence Test (SRT) counts as a full year of UK residence for IHT purposes -- a critical distinction from income tax treatment, where split years apportion the tax year between UK and overseas periods.23

Worked example -- Standard LTR determination:

An individual arrives in the UK in 2010-11 and becomes UK tax resident from that year. Death occurs on 15 January 2026 (tax year 2025-26). The 20 preceding tax years are 2005-06 to 2024-25. UK residence: 2010-11 to 2024-25 = 15 years. Result: LTR (15 of 20 preceding years). Worldwide assets are within IHT scope.

Worked example -- Borderline case with split year:

An individual arrives in the UK on 1 November 2015 (tax year 2015-16). Under the SRT, 2015-16 is a split year for income tax purposes. For IHT, however, the individual is treated as UK resident for the entire 2015-16 tax year.2 If death occurs on 1 May 2025 (tax year 2025-26), the 20 preceding tax years are 2005-06 to 2024-25. UK residence: 2015-16 to 2024-25 = 10 years. Result: LTR. Had the split-year treatment reduced the count, the individual would not meet the 10-year threshold.

2.2 The Modified Test for Under-20s

For individuals aged 20 or under at the start of the relevant tax year, the test is modified: LTR status applies if the individual has been UK resident for at least 50% of the tax years from birth to the tax year of the chargeable event (IHTM47025).310 This prevents young adults born abroad but raised in the UK from falling outside worldwide IHT scope merely because they have not accumulated 10 years of residence.

2.3 Constructing the Residence History: IHT401a

Form IHT401a, introduced from April 2025, must be completed when it is claimed that the deceased was not an LTR -- that is, where the estate seeks to exclude non-UK assets from IHT scope.11 The form requires:

  • Approximate value of overseas assets
  • Foreign taxes paid on those assets
  • Tax residence history spanning up to 39 years (20 preceding tax years for the LTR test, plus additional history where transitional provisions apply)1112

This documentation requirement represents a step-change from the domicile regime, where IHT401 required evidence of domicile of origin and any subsequent domicile of choice -- matters that, while legally complex, did not demand a year-by-year factual residence record spanning decades.

Evidence sources for residence history construction include: HMRC self-assessment records (where available); passport entry/exit stamps; employer records and work permits; overseas tax returns and tax residence certificates; National Insurance contribution records; electoral roll entries; property ownership records; and, in some cases, statutory declarations from family members or professional advisors who can attest to periods of residence.12

HMRC applies risk-based decisions when investigating IHT401a claims (IHTM47011).13 Estates claiming non-LTR status where overseas assets are substantial or residence patterns complex are more likely to face HMRC scrutiny. Proactive record-keeping during a client's lifetime -- maintaining a contemporaneous residence log with supporting documentation -- substantially reduces the compliance burden at death and the risk of adverse HMRC risk decisions.

2.4 Transitional Provisions

Individuals who held deemed domicile status on 30 October 2024 retain LTR status for a minimum of 3 years of non-residence from 6 April 2025 (IHTM47021).14 This transitional provision prevents formerly deemed-domiciled individuals from immediately escaping worldwide IHT scope by emigrating at the point of regime change.

3. Foreign Asset Identification, Valuation, and Reporting

3.1 The Accountant's Reporting Obligation

For LTR estates, the IHT400 (principal Inheritance Tax account) must include all assets regardless of location.15 Submission is required within 12 months of death and before applying for a grant of probate or confirmation.15 Schedule IHT417 must accompany the IHT400 where the deceased held assets outside the UK, covering bank accounts, property, investments, and cryptoassets.16 Foreign assets are not included in boxes 49-96 of the IHT400 itself; they are reported exclusively through IHT417.16

The practical challenge is considerable. Identifying worldwide assets for an LTR estate may require correspondence with financial institutions across multiple jurisdictions, engagement with overseas legal advisors, and searches of foreign land registries and company registers -- processes that vary in speed, cost, and reliability depending on the jurisdictions involved.

3.2 Valuation Principles and Exchange Rate Methodology

Foreign property is valued at open market value under IHTA 1984 s.160, applying the same principle as UK-situs assets.17 HMRC's Shares and Assets Valuation (SAV) team is responsible for valuing overseas property and providing valuations with vacant possession.18

Conversion to sterling is made at the London buying rate on the date of death (or date of the chargeable event).19 Where a foreign tax credit is claimed, conversion uses the London selling rate on the date the foreign tax was paid.19 These rates are obtainable from the Bank of England's published exchange rate data. The distinction between buying and selling rates carries material consequences for estate calculations: on significant foreign asset values, the spread between rates can produce a meaningful difference in the sterling figure reported.

Worked example -- Foreign asset valuation (illustrative rates):

An LTR dies on 10 September 2025. The estate includes a French property valued at EUR 450,000, a Swiss bank account holding CHF 180,000, and a US brokerage account valued at USD 320,000.

  • French property: EUR 450,000 at London buying rate of 1.1800 EUR/GBP = GBP 381,356
  • Swiss account: CHF 180,000 at London buying rate of 1.1350 CHF/GBP = GBP 158,590
  • US brokerage: USD 320,000 at London buying rate of 1.2750 USD/GBP = GBP 250,980
  • Total foreign assets for IHT417: GBP 790,926

French succession tax of EUR 35,000 paid on 15 January 2026 at London selling rate of 1.1650 EUR/GBP = GBP 30,043 available as foreign tax credit under s.159 IHTA 1984 (unilateral relief, France having only a pre-1975 estate duty treaty with the UK).20

3.3 The Section 173 Administration Deduction

IHTA 1984 s.173 allows a deduction for the additional expense of administering or realising non-UK property, capped at 5% of the value of the overseas property (IHTM27050).21 In the example above, the maximum s.173 deduction would be 5% of GBP 790,926 = GBP 39,546. This deduction applies to additional costs arising from the overseas location of assets -- professional fees for foreign lawyers, translation costs, overseas probate proceedings, and international banking charges -- not to ordinary administration expenses that would be incurred for UK assets.

Accountants should ensure the s.173 deduction is claimed where applicable, as it produces a meaningful reduction in the IHT-liable estate value. The deduction is frequently overlooked in practice, particularly where overseas assets are limited to bank accounts or investment portfolios that do not generate obviously visible administration costs but still incur cross-border transaction expenses.

3.4 Common Valuation Challenges

Particular difficulties arise with: foreign real estate in jurisdictions without developed comparable sales data; unlisted shares in overseas private companies, where HMRC's SAV team may require a full share valuation exercise; assets in jurisdictions with exchange controls or restricted currencies; and cryptoassets held on overseas exchanges, which require identification, access (often dependent on recovery of private keys), and valuation at date-of-death market rates.1618

4. Managing the IHT Tail

4.1 The Graduated Tail Period

When an LTR ceases UK residence, worldwide assets remain within IHT scope for a graduated period determined by the length of prior UK residence:522

Years of UK Residence (of preceding 20) IHT Tail Duration
10-13 years 3 years
14 years 4 years
15 years 5 years
16 years 6 years
17 years 7 years
18 years 8 years
19 years 9 years
20 years 10 years

LTR status resets only after 10 consecutive years of non-UK residence.5 The tail creates a novel advisory obligation for accountants that did not exist under the domicile regime, where cessation of deemed domicile operated on a simpler three-year basis without graduation.

4.2 Monitoring Framework

During the tail period, the departing LTR's worldwide estate remains within IHT scope. Any death within the tail triggers a full worldwide IHT reporting obligation on form IHT400, including IHT417 for foreign assets.1516 Lifetime gifts made during the tail -- both potentially exempt transfers (PETs) and chargeable lifetime transfers (CLTs) -- carry IHT consequences as if the individual remained an LTR.2

Accountants advising departing LTR clients should establish a monitoring framework comprising:

  • Tail period calculation -- determining the applicable tail duration based on residence history
  • Worldwide asset schedule -- maintaining an up-to-date record of the client's global asset base, updated at least annually
  • Lifetime gift register -- recording all transfers (PETs and CLTs) made during the tail period
  • Overseas tax monitoring -- tracking the client's tax position in the destination country to identify potential double taxation exposure
  • Annual review trigger -- a calendar-based prompt for annual client engagement to update asset values and review planning

4.3 Double Taxation During the Tail

The tail creates acute double taxation risk. A departing LTR who dies within the tail period faces potential IHT on worldwide assets whilst simultaneously subject to the destination country's death taxes or succession duties. Relief depends on whether a bilateral IHT convention exists with the destination country. The UK maintains IHT conventions with only ten countries (six post-1975, four pre-1975 estate duty treaties).2324 For the approximately 190 countries without an IHT treaty, unilateral relief under IHTA 1984 s.159 is the sole mechanism.20 Section 267ZF IHTA 1984 (inserted by Finance Act 2025, Schedule 13, paragraph 27) maps LTR status to deemed domicile for the purposes of applying post-1975 conventions.23

Practitioners advising clients departing to jurisdictions without an IHT treaty should note that unilateral relief under s.159 is limited to credit for overseas tax on the same property on the same event -- it does not provide comprehensive elimination of double taxation where the two jurisdictions apply different bases of charge.

4.4 Planning Considerations

The timing of departure is material. A client who has been UK resident for 13 of the preceding 20 years faces a 3-year tail; one further year of residence before departure extends the tail to 4 years. Accountants should advise clients approaching emigration to consider the tail period implications of continued UK residence. Asset restructuring -- for example, transferring non-UK assets to a non-LTR spouse (subject to the GBP 325,000 cap) or settling assets into trusts before achieving LTR status -- may warrant consideration, though such planning must be evaluated against the anti-avoidance provisions and the general anti-abuse rule (GAAR).25

5. Spousal Exemption and Elections Under the New Regime

5.1 The Restricted Exemption

From 6 April 2025, the spousal exemption framework mirrors the LTR test:2627

  • LTR to LTR spouse: fully exempt (no cap)
  • LTR to non-LTR spouse: exempt up to GBP 325,000 only (the NRB)
  • Non-LTR to LTR spouse: fully exempt
  • Non-LTR to non-LTR spouse: fully exempt for UK assets within scope

The GBP 325,000 cap on transfers from an LTR to a non-LTR spouse is the most significant planning constraint. For a worldwide estate valued at GBP 3 million, only GBP 325,000 passes to the non-LTR spouse exempt from IHT; the balance is chargeable. This contrasts with transfers between two LTR spouses, where the entire estate passes exempt regardless of value.26

5.2 The Spousal LTR Election

A non-LTR spouse may elect to be treated as an LTR for IHT purposes.2628 The election brings unlimited spousal exemption into play but carries a fundamental trade-off: the electing spouse's worldwide assets are brought within IHT scope.28

HMRC guidance on spousal LTR elections spans IHTM47031 to IHTM47040, covering eligibility, timing, mechanics, processes, disclosure, effectiveness, consequences, and cessation.28 Key operational features:

  • The election is made to HMRC and takes effect from the date specified
  • Once effective, the electing spouse is treated as an LTR for all IHT purposes
  • The election ceases to have effect after 10 consecutive tax years of non-UK residence26
  • Transitional provision: elections made under the former domicile regime by non-UK domiciled spouses automatically roll over into LTR elections from 6 April 202510

5.3 Trade-Off Analysis

The election decision requires careful quantification. Consider a scenario where a UK-resident LTR (spouse A) holds worldwide assets of GBP 4 million, while the non-LTR spouse (spouse B) holds overseas assets of GBP 2 million.

Without election: On spouse A's death, the first GBP 325,000 passes to spouse B exempt; the remaining GBP 3,675,000 is chargeable. IHT at 40% (after NRB) on the chargeable amount produces a substantial liability. Spouse B's overseas assets of GBP 2 million remain excluded property.

With election: Spouse B elects LTR status. On spouse A's death, the entire GBP 4 million passes to spouse B exempt. No immediate IHT liability arises. However, spouse B's worldwide estate now includes both the inherited GBP 4 million and the original overseas assets of GBP 2 million -- a combined GBP 6 million within IHT scope on spouse B's subsequent death.

The calculation is fact-specific and must account for: likely asset growth; spouse B's anticipated residence pattern (will the election cease after 10 years non-residence?); available reliefs including NRB, RNRB, and any transferable NRB from spouse A; and the availability of double taxation relief on overseas assets.2023 The election should not be made reflexively; it demands a comprehensive estate modelling exercise.

6. Excluded Property Trusts: Compliance Under the New Regime

6.1 Pre-30 October 2024 Trusts: Transitional Protection

Trusts settled and funded before 30 October 2024 by non-UK domiciled settlors benefit from partial transitional protection:2930

  • Foreign assets in such trusts are not subject to gift with reservation (GWR) rules even if the settlor subsequently becomes an LTR (IHTM47022)31
  • Relevant property regime charges -- up to 6% at ten-year anniversaries and proportionate exit charges -- continue to apply29
  • A cap applies to IHT charges on relevant property at GBP 5 million per 10-year cycle for trusts holding excluded property as at 30 October 202430
  • The settlor must demonstrate non-UK common law domicile at 30 October 202430

The GBP 5 million cap is a concession for existing trust structures, recognising that non-UK domiciled settlors who established trusts on the basis that the assets would remain outside IHT should not face the full impact of the regime change retrospectively. However, the cap applies only to the periodic and exit charges under the relevant property regime -- it does not exempt the trust assets from IHT entirely.

6.2 Post-30 October 2024 Trusts: The "Floating" Test

For trusts settled after 30 October 2024, excluded property status depends on the settlor's LTR status at each charging event -- the "floating" test (IHTM47050-47053).32 This represents a fundamental departure from the former regime, under which excluded property status was fixed at the date of settlement based on the settlor's domicile.

Under the floating test, a trust containing foreign-situs assets is excluded property at a given ten-year anniversary or exit only if the settlor is not an LTR at that date.32 If the settlor subsequently becomes an LTR (or reverts to LTR status after a period of non-residence), the trust's excluded property status is lost at the next charging event.

6.3 QIIP Trusts: The Dual Test

For qualifying interest in possession (QIIP) trusts from 6 April 2025, property is excluded property only if both the settlor and the interest in possession beneficiary are not LTRs at the time of the chargeable event (IHTM47051).33 This dual test creates additional monitoring complexity: trust accountants must track the LTR status of two individuals at each relevant date.

6.4 Ongoing Monitoring Obligations

Trust accountants face an ongoing obligation to assess the settlor's (and, for QIIPs, the beneficiary's) LTR status at each ten-year anniversary and exit. This requires maintaining a residence history for the settlor that is updated annually, calculating LTR status at each charging event, and determining whether excluded property status applies. Where the settlor's LTR status is borderline -- for example, where the settlor has been UK resident for 9 of the preceding 20 years and may or may not achieve a tenth year before the next anniversary -- proactive planning and contingency calculations are essential.

The interaction with APR/BPR relief caps from April 2026 adds further complexity. Where a trust holds qualifying business or agricultural property, the combined 100% relief is capped at GBP 2.5 million per individual, with 50% relief above the cap.3435 For trusts holding worldwide business or agricultural assets, the convergence of the floating excluded property test and the APR/BPR cap requires coordinated analysis at each charging event.

7. Convergence Planning: APR/BPR, Pensions, and the LTR Regime

7.1 APR/BPR Relief Caps from April 2026

From 6 April 2026, the combined 100% Agricultural Property Relief and Business Property Relief allowance is capped at GBP 2.5 million per individual (increased from the originally proposed GBP 1 million following the December 2025 government concession); relief applies at 50% for qualifying assets above the cap.3435 The allowance is transferable between spouses, creating an effective GBP 5 million combined threshold.34

For worldwide estates, this creates additional complexity where agricultural or business property is held across jurisdictions. An LTR with a UK farming operation valued at GBP 2 million and an overseas agricultural enterprise valued at GBP 1.5 million faces a combined qualifying asset value of GBP 3.5 million. The first GBP 2.5 million receives 100% relief; the remaining GBP 1 million receives 50% relief, producing an IHT-chargeable value of GBP 500,000 on those assets alone. Valuation of overseas agricultural or business property for APR/BPR purposes adds the familiar challenges of foreign asset valuation discussed in Section 3.

7.2 Pension Death Benefits from April 2027

From 6 April 2027, unused pension funds and death benefits will be brought within the value of a person's estate for IHT purposes.36 Personal representatives -- not pension scheme administrators -- will be liable for reporting and paying IHT on pension assets.36 The government estimates approximately 10,500 estates will have a new IHT liability, with the average IHT liability increasing by approximately GBP 34,000.36

For worldwide estates, this adds a further asset class to the IHT400 return. Where an LTR holds pension assets across jurisdictions -- UK registered pension schemes, overseas pension schemes, qualifying recognised overseas pension schemes (QROPS) -- the identification, valuation, and reporting of pension wealth will require coordination with pension scheme administrators in multiple countries. The interaction between UK IHT on pension death benefits and foreign death taxes on the same pension assets will create further double taxation relief considerations.

7.3 The Combined Compliance Burden

The convergence of three major IHT reforms -- the residence-based regime (April 2025), APR/BPR caps (April 2026), and pension death benefits (April 2027) -- creates compounding complexity for worldwide estates. An LTR estate with foreign property, agricultural assets, business interests, and pension wealth requires coordinated analysis across all three reformed frameworks. Accountants should begin preparing now: documenting pension assets alongside the worldwide asset schedule, ensuring APR/BPR qualifying status is evidenced for overseas agricultural and business property, and building the reporting infrastructure to handle the expanded IHT400 return from April 2027.

Conclusion

The residence-based IHT regime represents the most fundamental change to the personal scope of Inheritance Tax in half a century. While the LTR test is objectively simpler than the domicile assessment it replaced, the compliance obligations it generates for accountants managing worldwide estates are materially more extensive.12

The five operational challenges identified in this article -- residence history construction, foreign asset valuation, IHT tail management, spousal exemption navigation, and excluded property trust compliance -- demand systematic responses. The documentation requirements are unprecedented: up to 39 years of residence history for IHT401a, worldwide asset schedules across multiple jurisdictions for IHT417, and ongoing monitoring of settlor LTR status for trust charging events.111632

Proactive engagement during a client's lifetime substantially reduces the compliance burden on death. Establishing contemporaneous residence records, maintaining worldwide asset inventories, and conducting periodic estate reviews that model the IHT consequences of the client's current residence pattern and asset base are no longer merely advisable -- they are essential components of a competent advisory service for international clients.

The regime is approaching the end of its first year of operation. Further HMRC guidance may clarify operational issues as practical experience accumulates. The technical amendments published in October 2025 for inclusion in Finance Bill 2025-26 are described as minor corrective measures that do not alter the underlying policy position.37 Accountants should monitor HMRC's Trusts and Estates newsletters for operational updates, particularly as the APR/BPR cap (April 2026) and pension death benefit inclusion (April 2027) approach implementation.

The expanding revenue trajectory -- GBP 7.1 billion in the first ten months, an OBR forecast of GBP 8.7 billion for 2025-26 -- ensures that HMRC's scrutiny of worldwide estates will intensify.78 The accountant's role in managing this compliance landscape has never been more demanding, nor more consequential.

CPD Declaration

Estimated Reading Time: 20 minutes Technical Level: Advanced Practice Areas: International Tax, Inheritance Tax, Estate Administration, Trust Compliance

Learning Objectives

Upon completing this article, practitioners will be able to:

  1. Apply the long-term UK resident test to determine whether an individual's worldwide assets fall within IHT scope, including the modified test for under-20s and the treatment of split years
  2. Calculate the sterling value of foreign assets for IHT reporting using the correct exchange rate methodology (London buying rate at date of death) and claim the section 173 administration deduction
  3. Evaluate the trade-offs of a spousal LTR election for a cross-border married couple, considering the interaction between unlimited spousal exemption and worldwide IHT exposure
  4. Assess the ongoing monitoring requirements for excluded property trusts where the settlor's LTR status determines excluded property status at each charging event under the "floating" test
  5. Identify the compounding compliance implications of three converging IHT reforms (residence-based regime, APR/BPR caps, pension death benefits) for worldwide estate administration

Competency Mapping

  • ICAEW Code of Ethics: Fundamental principle of professional competence and due care -- maintaining knowledge of current tax legislation affecting client estate compliance
  • PCRT (Professional Conduct in Relation to Taxation): Standard 2.28 -- obligation to act in clients' legitimate interests within the law, including advising on available reliefs and exemptions
  • AAT Professional Standards: Compliance with tax obligations and maintenance of technical knowledge in relation to IHT reporting

Reflective Questions

  1. How would the introduction of a contemporaneous residence log for internationally mobile clients change current engagement processes, and what systems would need to be established to maintain such records effectively?
  2. In what circumstances might a spousal LTR election produce a worse overall IHT outcome than accepting the GBP 325,000 restricted exemption, and how should that analysis be communicated to clients?
  3. What practical steps should be taken now to prepare for the inclusion of pension death benefits in IHT from April 2027, particularly for clients with pension assets held across multiple jurisdictions?

Professional Disclaimer

The information presented reflects the regulatory and legislative position as of 26 February 2026. Regulations, tax rules, and professional guidance are subject to change. Readers should independently verify all information before acting and seek advice from appropriately qualified solicitors, financial advisors, or other professionals for their specific circumstances.

Neither WUHLD nor the author accepts liability for any actions taken or decisions made based on the content of this article. Professional readers are reminded of their own regulatory obligations and duty of care to their clients.

Footnotes

Footnotes

  1. Finance Act 2025 (c.8), Schedule 13 -- Inheritance Tax: long-term UK residence. https://www.legislation.gov.uk/ukpga/2025/8/schedule/13 ↩ ↩2

  2. HMRC Inheritance Tax Manual, IHTM47020 -- Long-term UK residence test. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47020 ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7

  3. ICAEW, "Changes to IHT from 6 April 2025." https://www.icaew.com/technical/tax/tax-faculty/taxline/articles/2025/changes-to-iht-from-6-april-2025 ↩ ↩2 ↩3

  4. Inheritance Tax Act 1984, section 6 (as amended by Finance Act 2025, Schedule 13). https://www.legislation.gov.uk/ukpga/1984/51/section/6 ↩

  5. GOV.UK, Inheritance Tax if you're a long-term UK resident. https://www.gov.uk/guidance/inheritance-tax-if-youre-a-long-term-uk-resident ↩ ↩2 ↩3

  6. GOV.UK, Inheritance Tax Thresholds. https://www.gov.uk/government/publications/inheritance-tax-thresholds/inheritance-tax-thresholds ↩

  7. HMRC Tax Receipts and National Insurance Contributions for the UK (monthly bulletin, February 2026). https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk/hmrc-tax-receipts-and-national-insurance-contributions-for-the-uk-new-monthly-bulletin ↩ ↩2

  8. Office for Budget Responsibility, Inheritance Tax Forecast (Budget November 2025). https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/inheritance-tax/ ↩ ↩2

  9. HMRC Inheritance Tax Manual, IHTM01030 -- Customer Compliance work. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm01030 ↩

  10. HMRC Inheritance Tax Manual, IHTM47025 -- Long-term UK residence test: under 20s. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47025 ↩ ↩2

  11. GOV.UK, Inheritance Tax: long-term UK residence (IHT401a). https://www.gov.uk/government/publications/inheritance-tax-long-term-united-kingdom-uk-residence-iht401a ↩ ↩2 ↩3

  12. Charles Russell Speechlys, "Cross-border estates and the new 'non-dom' regime: UK IHT reporting on death." https://www.charlesrussellspeechlys.com/en/insights/expert-insights/private-wealth/2025/cross-border-estates-and-the-new-non-dom-regime-uk-iht-reporting-on-death/ ↩ ↩2

  13. HMRC Inheritance Tax Manual, IHTM47011 -- Long-term UK residence: Investigation of form IHT401a -- Risk Decisions. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47011 ↩

  14. HMRC Inheritance Tax Manual, IHTM47021 -- Long-term UK residence test: Transitional provisions. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47021 ↩

  15. GOV.UK, Inheritance Tax Account (IHT400). https://www.gov.uk/government/publications/inheritance-tax-inheritance-tax-account-iht400 ↩ ↩2 ↩3

  16. GOV.UK, Inheritance Tax: foreign assets (IHT417). https://www.gov.uk/government/publications/inheritance-tax-foreign-assets-iht417 ↩ ↩2 ↩3 ↩4 ↩5

  17. Inheritance Tax Act 1984, section 160. https://www.legislation.gov.uk/ukpga/1984/51/section/160 ↩

  18. HMRC Shares and Assets Valuation Manual, SVM108053 -- Inheritance Tax: Foreign Land. https://www.gov.uk/hmrc-internal-manuals/shares-and-assets-valuation-manual/svm108053 ↩ ↩2

  19. HMRC Inheritance Tax Manual, IHTM27000 -- Foreign property: contents. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm27000 ↩ ↩2

  20. Inheritance Tax Act 1984, section 159 -- Unilateral relief. https://www.legislation.gov.uk/ukpga/1984/51/section/159 ↩ ↩2 ↩3

  21. HMRC Inheritance Tax Manual, IHTM27050 -- Foreign property: valuation of assets: deduction for administration of non-UK assets. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm27050 ↩

  22. Royal London for Advisers, "LTR and Non-dom inheritance tax." https://adviser.royallondon.com/technical-central/protection-guidance/inheritance-tax-and-related-manuals/long-term-resident-and-inheritance-tax/ ↩

  23. HMRC Inheritance Tax Manual, IHTM47071 -- Long-term UK residence test: Post-1975 Double Taxation Conventions. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47071 ↩ ↩2 ↩3

  24. HMRC Inheritance Tax Manual, IHTM47072 -- Long-term UK residence test: Pre-1975 Double Taxation Conventions. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47072 ↩

  25. Finance Act 2013, Part 5 -- General anti-abuse rule. https://www.legislation.gov.uk/ukpga/2013/29/part/5 ↩

  26. HMRC Inheritance Tax Manual, IHTM11033 -- Spouse or civil partner exemption: spouse or civil partner domiciled outside UK. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm11033 ↩ ↩2 ↩3 ↩4

  27. Inheritance Tax Act 1984, section 18. https://www.legislation.gov.uk/ukpga/1984/51/section/18 ↩

  28. HMRC Inheritance Tax Manual, IHTM47031 -- Long-term UK residence: Spousal long-term UK residence elections -- Introduction. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47031 ↩ ↩2 ↩3

  29. Saffery, "Inheritance tax reforms for UK non-doms." https://www.saffery.com/insights/articles/inheritance-tax-reforms-for-uk-non-doms/ ↩ ↩2

  30. GOV.UK, Capping Inheritance Tax trust charges for excluded property in trusts at 30 October 2024. https://www.gov.uk/government/publications/capping-inheritance-tax-trust-charges-for-former-non-uk-domicile-residents/cap-inheritance-tax-trust-charges-to-5m-for-former-non-uk-domiciles-from-6-april-2025 ↩ ↩2 ↩3

  31. HMRC Inheritance Tax Manual, IHTM47022 -- Long-term UK residence test: Transitional provisions: Excluded property comprised in a settlement at 30 October 2024. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47022 ↩

  32. HMRC Inheritance Tax Manual, IHTM47050 -- Long-term UK residence test: Foreign settled property. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47050 ↩ ↩2 ↩3

  33. HMRC Inheritance Tax Manual, IHTM47051 -- Long-term UK residence test: Foreign settled property: Qualifying Interests in Possession. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47051 ↩

  34. Saffery, "Planned cap on APR and BPR inheritance tax reliefs raised to GBP 2.5m." https://www.saffery.com/insights/news/planned-cap-on-apr-and-bpr-inheritance-tax-reliefs-raised-to-2-5m/ ↩ ↩2 ↩3

  35. GOV.UK, Inheritance Tax nil-rate band and residence nil-rate band thresholds from 6 April 2026 to 5 April 2028. https://www.gov.uk/government/publications/inheritance-tax-nil-rate-band-and-residence-nil-rate-bands-from-6-april-2026/inheritance-tax-nil-rate-band-and-residence-nil-rate-band-thresholds-from-6-april-2026-to-5-april-2028 ↩ ↩2

  36. GOV.UK, Inheritance Tax on unused pension funds and death benefits. https://www.gov.uk/government/publications/inheritance-tax-unused-pension-funds-and-death-benefits/inheritance-tax-on-unused-pension-funds-and-death-benefits ↩ ↩2 ↩3

  37. GOV.UK, Technical amendments to the residence-based tax regime. https://www.gov.uk/government/publications/residence-based-tax-regime-technical-amendments/technical-amendments-to-the-residence-based-tax-regime ↩

Preview Free