Last updated: 14 October 2026
How do the Inheritance Tax rules work for expats returning to the UK?
Since 6 April 2025, Inheritance Tax (IHT) on worldwide assets depends on long-term UK residence, not domicile. You’re a long-term resident, and your worldwide estate is in scope, if you’ve been UK resident for at least 10 of the last 20 tax years. If you come back to the UK after years abroad, your non-UK assets may stay outside IHT for a while. But once you’ve been back long enough to reach 10 out of 20 years, they come into scope. UK assets, such as a UK home, are always within IHT.
The long-term residence test
| Your history | Worldwide assets in IHT? |
| UK resident for 10 or more of the last 20 tax years | Yes |
| UK resident for fewer than 10 of the last 20 tax years | No, only UK assets |
| Left the UK after being long-term resident | Yes, for 3 to 10 years after leaving (the “tail”), depending on time spent in the UK |
| Never UK resident | No, only UK assets |
The tail after leaving lasts 3 years for those resident 10 to 13 years, rising by one year for each extra year, up to 10 years for those resident 20 years or more.
Example
Rebecca grew up in the UK and was UK resident up to 2009/10. She lived in Dubai from 2010/11 to 2023/24 and returned in April 2024. For a death or gift in 2026/27, HMRC looks at the 20 previous tax years, 2006/07 to 2025/26. She was UK resident in 4 of them before leaving, plus 2024/25 and 2025/26, so 6 years in total. She isn’t a long-term resident yet, so her overseas investments are outside IHT. If she stays, her early years drop out of the window as new ones are added, so her count stays at 6 until 2030/31. She reaches 10 of the previous 20 years in 2034/35, when her worldwide assets come into scope.
UK assets are always taxable
Wherever you live, UK property, UK bank accounts and UK company shares are within IHT. Since 2017, UK residential property held through an overseas company is also caught.
Planning for returning expats
- Work out your residence history carefully, year by year
- Consider gifts of non-UK assets before you become long-term resident
- Review trusts, which have changed significantly since April 2025
- Make sure your will works in each country where you hold assets
- Check double taxation treaties, which may override the rules
Income tax for new arrivals
If you return after at least 10 years of non-residence, you may be able to claim the 4-year foreign income and gains (FIG) regime, which exempts foreign income and gains from UK tax for your first 4 years. You must claim it on your tax return.
Spouses
A spouse who isn’t long-term resident can only receive £325,000 tax-free from a long-term resident spouse, unless they elect to be treated as long-term resident.
Frequently asked questions
Does domicile still matter?
Not for IHT from 6 April 2025, except under some treaties.
Do split years count as UK resident?
Yes, a split year counts as a year of UK residence.
Can I check my status with HMRC?
There’s no ruling service; keep records of your residence.
Are pensions abroad included?
From April 2027, unused pension funds, including some overseas schemes, can be.
Related: foreign inheritances, offshore investments and IHT and overseas rental income.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with Inheritance Tax for expats. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
