The UK’s new 10-Year tail: how to protect your wealth overseas

By Steve Thompson, Founder & CEO @ Atlas Bridge Wealth | Guiding families and individuals in Portugal

November 29, 2025

Every week I speak to British families who’ve made the move abroad, or are planning to. Portugal, Spain, Malta, Dubai… the destinations differ, but the theme is the same:

“Steve, how does the UK tax me now that I live here?”

And the honest answer is: until recently, the rules were messy. Domicile was vague, subjective, and open to interpretation. It made long-term planning unnecessarily uncertain.

That’s now changing, and in my view, for the better.

With more than 257,000 Brits leaving the UK in 2024 (and 143,000 returning), the government had no choice but to modernise how international lives are taxed. So from April 2025, the UK introduced a new concept: 

Long-Term Residence (LTR).

If you’re a British expat, or might be one in the future, this shift is worth paying attention to.

A Tale of Two Tests: SRT + LTR

To understand the new rules, you first need to understand the old foundation: the Statutory Residence Test (SRT).

The SRT has been the UK’s go-to residency test since 2013, and it’s very black-and-white. It looks at how many days you spend in the UK, your ties to the country, whether you work there, and whether you have a home there.

It’s annual, mechanical, and predictable, which a good thing.

LTR sits on top of that. Instead of asking, “Where are you right now?” it asks:

“Where have you been over the long term?”

If you’ve been UK resident for 10 of the last 20 years, you become a Long-Term Resident.

And that label has consequences.

Why This Change Is Actually Good News

For as long as I’ve been working in this industry, domicile has been the elephant in the room. 

Clients would ask:

• “Am I still UK-domiciled?”

• “If I’m non-resident, am I still in the IHT net?”

• “If I die abroad, who taxes what?”

And the answer was: it depends, often on factors you can’t measure, like “intentions” and “connections.”

LTR removes the guesswork. It replaces a subjective concept with a clear timeline and a predictable rulebook.

Here’s the important bit:

After 10 full UK tax years of non-residence, your 'non-UK' assets fall outside the UK IHT net.

That is a huge shift, and a massive planning opportunity for anyone who intends to settle abroad.

The 10-Year Tail: Staying Taxable After You Leave

Once you qualify as a Long-Term Resident, the UK doesn’t let you go immediately.

There’s a “tax tail” as they're calling it — up to 10 years in fact — where you remain exposed to UK inheritance tax on your worldwide assets.

Think of it like a shadow you carry behind you.

But once you’ve been abroad long enough, that shadow disappears. At that point:

• only your UK-situs assets remain taxable, and

• many of those can be structured as excluded property with the right planning.

This is where advisers like me work closely with clients to reposition UK pensions, investment structures, trusts, and even property.

Double Tax Treaties Still Matter

A common misconception is that the SRT tells the whole story. It doesn’t.

If you qualify as resident in two countries, which happens more often than you’d think, the “tiebreaker” in the UK’s treaties decides which country gets primary taxing rights.

This comes up all the time with people who:

• Work between the UK and Europe

• Stay long periods in Portugal or Spain

• Return home temporarily

• Own homes in both countries

The treaty can override the domestic test, which is why it’s essential to look at both sides of the equation.

2027: The Year UK Pensions Join the IHT Conversation

Another shift is coming that most Brits living abroad haven’t yet realised....

From 2027, UK pensions will form part of the IHT estate.

This used to be one of the UK’s best planning tools, pensions were typically outside IHT. That’s no longer automatic.

Unless restructured, a large SIPP or defined contribution pot could now:

• increase your IHT exposure

• drag overseas assets into play

• affect your spouse and children’s succession planning

I’m having this conversation almost daily with clients in Portugal who assumed their pensions were “safe.”

Returning to the UK: A Hidden Opportunity

Here’s something most people don’t know:

If you return to the UK after 10 consecutive years of non-residence, your overseas assets stay outside the UK inheritance tax system for the next 10 years.

And for four years, you may also qualify for 100% exemption on foreign income and gains under the FIG regime.

That’s an incredible planning window if used correctly.

The Bigger Picture: A New Chapter for Cross-Border Lives

The combination of SRT + LTR signals a turning point in UK tax policy.

It recognises that:

• more Brits are living internationally

• lives don’t fit neatly within one tax boundary

• hard numbers beat subjective tests

• people need clarity to plan confidently

For expats, this means more control, better predictability, and genuinely meaningful opportunities to optimise tax, succession, and long-term wealth.

For advisers like me working with British expatriates in Portugal and across Europe, it finally gives us a rulebook that isn’t based on guesswork or “hoping HMRC agrees.”

Final Thoughts

Whether you’re:

• already living abroad,

• thinking of relocating,

• planning your retirement, or

• considering a return to the UK,

the interaction between SRT, LTR, double tax treaties, and the 2027 pension changes is now central to effective planning.

If you want clarity on where you sit today, and how to structure your future, feel free to reach out. This is exactly what I help clients navigate every day at Atlas Bridge Wealth.