Don't Get Taxed Twice: Expat's Guide to UK Inheritance Tax Changes

Changes to UK Inheritance Tax for Expats

If you've left the UK, but have significant global wealth, the UK tax office (HMRC) might still be able to tax your estate. Starting in April 2025, the rules for UK Inheritance Tax (IHT) are changing from being based on your "domicile" to your "residency."

This means:

• Even if you've been living abroad for years, your worldwide assets could still be subject to UK IHT.

• If you've lived in the UK for 10 out of the past 12 years, your global estate may be at risk.

• You could remain liable for up to 10 years after leaving the UK.

This change could be a big deal for expats who thought their assets were safe from UK tax.

Pensions and Your Estate

Starting in April 2027, even your untouched pension pots could be hit with IHT. When combined with income tax, the tax rate for your beneficiaries could be as high as 67%.

The new rules mean that previous protections for offshore trusts and pensions may be removed, bringing more of your wealth into the IHT net.

What You Should Do Now

The new rules are coming soon, so it's a good time to review your financial situation.

• Revisit your estate plan. The old assumptions may not apply anymore.

• Review your UK residency history to see how the new rules might affect you.

• Look at your pension and asset strategy to see what changes you might need to make.

Acting early can help you legally and efficiently reduce your tax exposure, ensuring more of your wealth goes to your family, not HMRC.