Key points
- Tax expert reveals how the UK’s shift from domicile to residency-based inheritance tax could free expats from global tax liability after a decade abroad
- The reforms introduce a 10-year residency test determining whether worldwide estates face UK inheritance tax, with new “tail provisions” affecting those who leave
- Expert warns that common mistakes around residency status and UK property ownership could invalidate expat tax benefits under the new system
The UK government has introduced one of the most significant overhauls to inheritance tax in recent history, replacing the domicile system with a residence-based framework since 6 April 2025. For expats who have spent a decade or more abroad, these changes represent a major financial turning point.
Under the new rules, individuals who have been non-UK residents for 10 consecutive tax years may, in certain circumstances, fall outside UK inheritance tax on non-UK assets Carl Turner, co-founder of Expat Tax Thailand, a tax advisory service for expatriates, explains why understanding these reforms matters.
What the new UK non-dom framework means for inheritance tax
The reforms fundamentally change how the UK determines inheritance tax liability. Since 6 April 2025, domicile is no longer the primary test for inheritance tax exposure. Instead, the focus shifts to how long someone has been UK tax resident within a 20-year period.
Since 6 April 2025, domicile is no longer the primary test for inheritance tax exposure. This replaces the old system where deemed domicile kicked in after 15 of the past 20 years.
UK assets remain subject to inheritance tax regardless of where you live. Non-UK assets only fall within scope once you meet the 10-year residence threshold. For someone who has been genuinely non-UK resident for more than 10 consecutive tax years, foreign property, overseas bank accounts, and international investments may sit outside UK inheritance tax, subject to the tail provisions and asset-specific rules.
The “tail provision” means you do not immediately escape inheritance tax liability when leaving the UK. If you have been a UK resident for 10 to 13 years, you remain within scope for three full tax years after leaving. This increases by one year for each additional year of UK residence. Stay for 20 years or more, and you face a full 10-year tail after departure.
The application of the tail provision depends on an individual’s precise residence history and should be reviewed carefully.
“Once you have been genuinely non-UK resident for 10 consecutive tax years, the lookback period can reset, provided the statutory tests are met,” Turner explains. “Your prior UK residence no longer counts, and your worldwide estate sits outside UK inheritance tax.”
Who stands to benefit most from the 10-year rule?
Long-term expats with overseas property stand to gain considerably. Someone who left the UK in 2015 and purchased property abroad would previously have remained liable for UK inheritance tax if they retained UK domicile. Under the new rules, having been non-resident for 10 years, their foreign property falls entirely outside UK inheritance tax scope.
Business owners with international assets face similar benefits. Retirees abroad with UK-based heirs also gain certainty, as the system now provides clear answers based purely on residence history rather than subjective domicile questions.
“The 10-year rule particularly helps expats who always intended their move to be permanent but struggled under the old domicile rules,” Turner notes. “However, some people assume that because they have lived abroad for years, they automatically qualify. The 10-year clock only starts if you are genuinely non-UK resident under the Statutory Residence Test.”
Residency vs domicile: The common confusions
Many expats misunderstand what residency actually means. Simply living abroad does not make you non-resident. UK tax residency follows the Statutory Residence Test, examining factors like how many days you spend in the UK, where you work, and where your family lives.
“I have met expats who were shocked to discover they were still UK residents after three years abroad,” Turner explains. “They assumed that renting a flat overseas made them non-resident, but they were coming back to the UK for 100 days a year, had close family in the UK, and were using their UK property. Those years do not count toward the 10-year non-residence period.”
Owning UK property does not automatically make you a UK resident, but it contributes to your UK ties under the Statutory Residence Test. The more ties you maintain, the fewer days you can spend in the UK before becoming resident again.
How to make sure you actually qualify after 10 years abroad
Meeting the 10-year non-residence requirement requires careful attention to evidence. Track your UK days carefully throughout each tax year. If you spend more than minimal time in the UK during a tax year, you need to ensure you meet the sufficient ties test, which can significantly reduce your permitted day count.
Obtaining residency status in your new country, registering with local tax authorities, and filing tax returns there all create clear evidence of where you are resident. Keep records of residence permits, local tax filings, and employment contracts.
“Documentation is everything,” Turner stresses. “If HMRC questions your residency status years from now, you want contemporary evidence, not vague recollections.”
Wills require updating under the new rules. Your will should account for which assets fall under which jurisdiction and how the residence-based rules apply to your estate. If you own UK residential property, it remains within scope for inheritance tax regardless of your residence status.
Financial behaviours need to align with your claimed non-residence. If you present yourself as an Australian resident but maintain all UK financial ties without declaring them locally, your position looks questionable.
“The biggest mistake I see is expats who think they can be casual about their residency status,” Turner observes. “They do not track their UK days properly and assume they are safe after 10 years abroad. When HMRC examines their position, it turns out they were classed as UK resident for several of those years without realising it.”
Carl Turner, co-founder of Expat Tax Thailand, said:
“These reforms represent a major shift in inheritance tax for internationally mobile individuals, but the 10-year rule only helps those who have genuinely been non-UK residents.
“It’s common for expats to overestimate how clear their residency status is. The advantage of the residence-based system is its clarity compared to domicile, but you need to understand and apply the rules correctly.
“Getting this wrong can throw off your entire 10-year timeline and leave you exposed to inheritance tax on your global estate when you thought you were clear. Track your UK days each year, maintain proper documentation of overseas residence, and keep your estate planning updated.”
About Expat Tax Thailand
Expat Tax Thailand is a tax advisory and filing service tailored specifically for expatriates living in Thailand, offering clear guidance on Thai tax obligations and succession planning. They help clients understand, comply with, and optimise their tax positions, from simple to complex cases, via a secure online platform. Their services include essential, assisted, and expert tax filings, along with strategic tax planning, estate planning, and cryptocurrency compliance. They ensure personalized, English-speaking, responsive support with certified Thai accountants who specialize in expat tax.
Sources
Information on the UK non-dom reforms:Deloitte – Reform of the UK’s “non-dom” regime, inheritance tax and trusts
UK inheritance tax changes: Saffery – Inheritance tax reforms for UK non-doms
Long-term resident provisions: Tax adviser – The scope of inheritance tax: a new residence-based system
Government policy on non-dom reforms: GOV.UK – Reforming the taxation of non-UK domiciled individuals
