Inheritance Tax

Is foreign property subject to UK inheritance tax?

Answered by Jordan Onraet-Wells, Founder & Chartered Tax Adviser (CTA). Published 17 July 2026. Last reviewed 17 July 2026.

The short answer

Yes, if you are a long-term UK resident: someone who has been UK tax resident in at least 10 of the previous 20 tax years. Long-term UK residents are within UK Inheritance Tax on their entire worldwide estate, which includes foreign property, overseas bank accounts and non-UK shares, at the standard 40% rate above the nil-rate band. If you are not a long-term UK resident, foreign property is outside UK IHT and broadly only your UK situated assets are chargeable. These residence-based rules replaced the old domicile test on 6 April 2025.

Since 6 April 2025, UK Inheritance Tax scope is set by residence, not domicile: the test is whether you are a long-term UK resident.
You are a long-term UK resident if you were UK tax resident in at least 10 of the previous 20 tax years, with each year decided under the Statutory Residence Test.
Long-term UK residents are taxed on their worldwide estate, so an overseas home, foreign land or foreign investments all count.
If you are not a long-term UK resident, broadly only UK situated assets are within charge, so foreign property escapes UK IHT.
Leaving the UK does not end exposure at once: a tail of 3 to 10 years keeps your worldwide estate, including foreign property, within UK IHT after departure.
The standard rate is 40% on the estate above the £325,000 nil-rate band, reduced to 36% where at least 10% of the net estate passes to charity.

The long-term resident test decides the answer

Whether your foreign property is caught depends entirely on your UK residence history. Under the residence-based IHT rules in force from 6 April 2025, HMRC counts your UK tax-resident years in the 20 tax years before the chargeable event (death or a chargeable transfer). Hit 10 or more and you are a long-term UK resident, so your whole worldwide estate, foreign property included, is within UK IHT. Fall short and only UK situated assets are in scope. This means new arrivals are broadly outside worldwide UK IHT for roughly their first decade of residence.

The trap: leaving the UK does not free foreign property straight away

Many expats assume becoming non-resident immediately takes their overseas assets out of UK IHT. It does not. If you were a long-term UK resident when you left, a tail of between 3 and 10 years applies: 3 years if you were resident in 13 or fewer of the last 20 tax years, rising by one year for each additional resident year up to a 10-year maximum for someone resident in all 20. During that tail your foreign property remains fully within UK IHT, and another country may tax the same asset at the same time, so check treaty positions.

What to do

Map your residence history year by year under the Statutory Residence Test, because a single mis-counted year can move your long-term resident status, and with it whether foreign property is in or out of scope. Then review the situs of your major assets: which are already chargeable as UK assets, and which only come into charge once you become a long-term resident. The most valuable planning window is before you reach the 10-of-20 threshold, or before a departure tail starts running, so take advice ahead of those crossover points.

Go deeper

Sources and further reading

This is general information for the 2026/27 UK tax year, not personal tax advice; speak to a Chartered Tax Adviser about your own position.

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