How the residence-based rules decide your exposure
From 6 April 2025 the UK abolished domicile as the connecting factor for Inheritance Tax and replaced it with a residence test. You are a long-term UK resident if you were UK tax resident, under the Statutory Residence Test, in at least 10 of the 20 tax years before death or a chargeable transfer. Long-term residents are within UK IHT on their entire worldwide estate; everyone else is broadly chargeable only on UK situated assets. Leaving does not switch this off at once: the tail starts at 3 years if you were resident in 13 or fewer of the last 20 years, then adds one year for each extra resident year, up to 10 years for someone resident in all 20. The full ladder is in our residence-based IHT guide.
The trap: UK assets and UK pensions never leave the net
Even after the tail expires, anything situated in the UK stays chargeable: a UK home, UK bank accounts and shares in UK companies remain within the 40% charge, however long you have lived abroad. From 6 April 2027 most unused pension funds are added to the estate on death, and a UK-registered scheme such as a SIPP counts as a UK asset for this purpose, so it stays in scope even for non-residents whose tail has ended. We cover this in UK pensions and IHT when you live abroad.
What to do if you live abroad or plan to leave
Map your UK residence history year by year: the long-term resident test, the length of your tail and any planning all run off the same Statutory Residence Test record. Inside the tail, understand which assets are exposed before making gifts or restructuring; past it, review where each asset is situated so only genuinely UK assets remain in charge. Where another country also taxes your estate, check the double tax treaty position rather than assuming one charge cancels the other.