United Kingdom · Tax regime
Residence-based inheritance tax (long-term UK resident test)
In force from 6 April 2025. Domicile and deemed domicile are gone. The test is now purely residence-based. Autumn Budget 2025 added a GBP 5m cap on relevant property charges for pre-30 October 2024 excluded property trusts, retrospective to 6 April 2025.
The IHT tail is the most widely misreported feature of the 2025 reform. It is NOT a flat 10 years. HMRC's manual at IHTM47020 sets a sliding scale. Leave with 13 or fewer resident years and the tail is 3 years. 14 years gives 4. 15 gives 5. The scale continues one for one up to a maximum of 10 years at 20+ years of residence. For a family that left at year 12 or 13, the difference between the widely quoted 10 years and the actual 3 is worth tens of millions on a large estate. It changes the entire departure calculus.
The facts
- Total landed cost
- 40% of the worldwide estate above the GBP 325,000 nil-rate band, once long-term resident status attaches. On a GBP 50m estate, that comes to roughly GBP 19.9m.
- Route type
- Tax regime, not a visa
- Timeline
- 10–20 years (Long-term resident status attaches once you have been UK resident in 10 of the previous 20 tax years. Resetting it requires 10 consecutive years of non-residence.)
- Physical presence
- Determined year by year under the Statutory Residence Test, over a rolling 20-year lookback.
- Family
- Tested individually. Spouses acquire and shed long-term resident status based on their own residence records, and those records frequently diverge
- Permanent residency
- Not applicable
- Citizenship
- Not applicable
- Dual citizenship
- Permitted
- Requirements
- Living in the UK for at least 10 of the previous 20 tax years triggers worldwide IHT exposure.There's a tail period after leaving: 3 years if you were resident for 13 years or fewer, 4 at 14, 5 at 15, 6 at 16, 7 at 17, 8 at 18, 9 at 19, and 10 years if you were resident for 20 or more.10 consecutive tax years of non-residence resets the test entirely.
- The 10-of-20 test is retrospective. Years of UK residence long before 6 April 2025 count. That means people who were never remotely close to deemed domicile under the old 15-of-20 rule woke up long-term resident on day one.
- The tail is a sliding scale, not a flat 10 years. But it cuts both ways. At 20+ resident years the tail is the full 10 years. That means a lifetime UK resident who leaves at 65 remains exposed to 40% on the worldwide estate until 75.
- Excluded property trusts no longer work as a permanent shelter. Settlor long-term resident status now drags trust property into the relevant property regime. The protection those trusts were sold on has gone. The GBP 5m cap applies per 10-year cycle, and only to trusts holding excluded property at 30 October 2024.
- The full reset needs 10 consecutive non-resident years. A single year back in the UK during the tail restarts the analysis.
- From 6 April 2026, UK agricultural land is in scope even when held through non-UK entities. This closes the offshore-company wrapper.
- Starting 6 April 2026, Agricultural and Business Property Relief will be capped. The first GBP 1m still gets 100% relief, but anything above that faces 20% IHT. The allowance is now transferable between spouses, a late reversal of the original policy.
- Charity exemption is now limited to gifts made to UK charities. This applies from 26 November 2025 for lifetime gifts and from 6 April 2026 for gifts made on death. Anyone with foreign charitable structures in an existing will should have it reviewed.
- Spouses are tested separately under the new rules. A common situation is one spouse who has lived in the UK long term and one who has not. That makes the order in which each spouse dies, and the old domicile-era spousal exemption planning, obsolete.