For many years, one sentence has been repeated by internationally mobile families living in the UK:

“I am not British, so my overseas assets should not be within UK Inheritance Tax.”

It is an understandable assumption.

A person may have been born in Italy, Spain, France, India, the United States, the Middle East or elsewhere. They may still have family abroad. They may own a home abroad. They may have inherited assets from parents overseas. They may even think of the UK as a place where they worked, built a business or raised children, but not necessarily as their permanent home.

For a long time, UK tax law looked very closely at the concept of domicile.

That was often a difficult and highly technical concept. It was not simply about nationality, passport, tax residence or where someone happened to live in a particular year. It was about deeper personal connections, origin, intention and long-term belonging.

But from 6 April 2025, the UK Inheritance Tax landscape changed significantly.

For Inheritance Tax purposes, the old domicile-based approach has been replaced by a residence-based test. The key concept is now long-term UK residence.

In simple terms, the question is no longer only:

“Where are you from?”

The better question is now:

“How many UK tax years have you accumulated?”

And that change matters enormously.

Imagine a familiar story.

Someone moves to London for work. At the beginning, the plan is temporary. Two years, perhaps three. The career progresses. The business grows. Children start school in the UK. A home is purchased. Friends, clients and professional connections are built.

Then, almost without noticing, three years become seven. Seven become ten. Ten become fifteen.

Meanwhile, life abroad has not disappeared.

There may still be a family property in Italy.
There may be a bank account in another country.
There may be investments held overseas.
There may be shares in a family company.
There may be assets inherited from parents.
There may be foreign life policies, pensions, trusts or succession arrangements.

In the mind of the family, there is often a clear division:

“The UK assets are one thing. The foreign assets are another.”

Unfortunately, that division may no longer work for UK Inheritance Tax purposes.

Under the new rules, if an individual becomes a long-term UK resident, their worldwide estate may fall within the scope of UK Inheritance Tax. That can include not only UK property and UK investments, but also foreign homes, overseas bank accounts, foreign investment portfolios, family assets abroad and, in some cases, trust-related structures.

This is a major change for internationally mobile individuals and families.

Broadly, a person may be a long-term UK resident if they have been UK tax resident for at least 10 out of the previous 20 tax years.

That means an individual who is not British, was not born in the UK, has foreign family roots and owns assets outside the UK may still find that those overseas assets are relevant for UK Inheritance Tax.

The most dangerous assumption is this:

“If I leave the UK, the problem disappears.”

That is not necessarily correct.

A person who has become a long-term UK resident may remain within the UK Inheritance Tax net for a period after leaving the UK. Depending on their residence history, that period may last for several years and can, in some cases, extend up to 10 tax years after departure.

This is where the issue becomes very real.

A family may leave the UK and move to Italy, Spain, Switzerland, the UAE, Portugal or elsewhere, believing that the UK chapter is closed. But for Inheritance Tax purposes, the UK may still have a continuing interest in the worldwide estate.

That can be a costly surprise.

UK Inheritance Tax is not a minor administrative issue. In general terms, it can apply at 40% above the available thresholds, subject to exemptions, reliefs and the specific circumstances of the estate.

For families with assets in more than one country, this can create serious practical issues.

There may be UK Inheritance Tax.
There may also be foreign succession tax.
There may be different rules in each country.
There may be different concepts of ownership.
There may be forced heirship rules.
There may be double tax relief issues.
There may be wills that no longer work properly together.
There may be trusts or companies that need to be reviewed.

The problem is rarely just tax. It is usually a family wealth and succession problem.

The worst time to discover it is after death, when the family is already dealing with grief, probate, banks, valuations, lawyers, notaries and tax authorities in more than one jurisdiction.

The best time to deal with it is before there is a crisis.

If you are UK resident and have lived in the UK for many years, you should consider asking some very practical questions:

How many UK tax years have I accumulated?

Am I already a long-term UK resident for Inheritance Tax purposes?

Are my foreign assets now potentially within the UK Inheritance Tax net?

If I leave the UK, how long could the UK exposure continue?

Do my wills still make sense across different countries?

Could my family face tax in more than one jurisdiction?

Do I need to review gifts, trusts, companies, pensions or overseas property?

Would my heirs know what to do if something happened tomorrow?

These are not theoretical questions. They are the questions that protect families from avoidable tax exposure, uncertainty and disputes.

For example, an Italian individual who has lived in London for 15 years, owns a UK home, has children in the UK, and still owns an inherited property in Italy should not assume that the Italian property is irrelevant to UK Inheritance Tax.

Similarly, a business owner who is planning to leave the UK after many years should not wait until after departure to review the position. The exit from the UK may be the right moment to review residence history, estate exposure, succession documents and the overall family wealth structure.

The key point is simple:

Leaving the UK does not always mean leaving UK Inheritance Tax behind.

From 6 April 2025, internationally mobile families need to think differently. The focus is no longer simply on nationality, birthplace or the old domicile analysis. The focus is now on residence history, timing, worldwide assets and succession planning.

Doing nothing may be the most expensive option.

At Vectigalis Tax, we advise internationally mobile individuals, families, entrepreneurs and professionals on UK and cross-border tax matters, including Inheritance Tax, residence, foreign assets and succession planning.

I am also a STEP member, reflecting my professional focus on trusts, estates, succession planning and private client tax.

If you have lived in the UK for many years, own assets abroad, or are thinking of leaving the UK, this is the right time to review your position.

A proper review can help you understand whether your worldwide estate is exposed to UK Inheritance Tax and what practical steps may be available before the issue becomes a family problem.

For a confidential consultation, please contact:

www.vectigalistax.co.uk
info@vectigalistax.co.uk

Vectigalis Tax — UK and International Tax Advice for internationally mobile individuals and families.