‘Will inheritance tax apply to my savings in another country?’

It is a question that comes up regularly with people who have lived in the UK for many years but have subsequently moved abroad:

“If I now live in another country, does UK inheritance tax still apply to my overseas savings, investments or property?”

The answer may be yes — and potentially for considerably longer than you might expect.

The UK inheritance tax rules changed significantly from 6 April 2025. The old concept of domicile has largely been replaced for inheritance tax purposes by a new long-term UK residence test.

What is a long-term UK resident?

Broadly, you are considered a long-term UK resident if you have been UK tax resident for at least 10 of the previous 20 tax years.

If you meet that test, your exposure to UK inheritance tax can extend beyond assets physically located in Britain.

Your worldwide estate may potentially fall within the UK inheritance tax net — including overseas bank accounts, investments and property.

And from 6 April 2027, most unused pension funds and pension death benefits will also be included within an individual's estate for UK inheritance tax purposes. This change has now been legislated through Finance Act 2026.

But what happens when you leave the UK?

This is perhaps the most misunderstood part.

Simply moving abroad does not necessarily end your exposure to UK inheritance tax.

There can be a significant time lag between becoming non-UK resident and your overseas wealth falling outside the scope of UK inheritance tax.

HMRC refers to this continuing period as part of the long-term residence rules.

Depending on how long you lived in Britain before leaving, you can remain within the UK inheritance tax regime for between three and ten tax years after departure.

Broadly:

• UK resident for 10–13 of the previous 20 years → potentially a 3-year inheritance tax tail

• 14 years → 4 years

• 15 years → 5 years

• 16 years → 6 years

• 17 years → 7 years

• 18 years → 8 years

• 19 years → 9 years

• 20 years → potentially a 10-year tail

That last point is especially important for British families who have spent most or all of their working lives in the UK.

Someone who has lived in Britain for decades and then retires to Portugal, Spain or elsewhere doesn't necessarily become free of UK inheritance tax on their worldwide estate when they get on the plane.

They could remain within its scope for another ten tax years.

A simple example

Imagine someone has lived and worked in the UK for 30 years before retiring overseas.

They sell their British home, move permanently abroad and become non-UK tax resident.

Over the following few years they build up:

• €300,000 in overseas bank deposits

• €750,000 of investments

• a €600,000 property in their new country of residence

• and retain a substantial pension.

It would be very easy to assume that because those assets are held outside Britain — and the individual no longer lives in Britain — they are outside UK inheritance tax.

That assumption could be wrong.

Because the person had been UK resident throughout the relevant previous 20 years, they could continue to be treated as a long-term UK resident for up to ten tax years after leaving. During that period, their overseas assets may remain exposed to UK inheritance tax.

What happens once the inheritance tax tail has ended?

Once an individual has ceased to be a long-term UK resident, the position can change substantially.

Their genuinely non-UK assets may then fall outside the UK inheritance tax net.

However, UK assets do not simply disappear from consideration.

Someone living permanently abroad may still have UK inheritance tax exposure on assets situated in Britain — UK property being an obvious example.

This means there are really two questions to consider:

1. Am I still regarded as a long-term UK resident?

and

2. Where are my assets actually situated?

Both can matter.

What about inheritance tax allowances?

Being caught by UK inheritance tax does not automatically mean that tax will be payable.

The normal exemptions and allowances still need to be considered.

The standard nil-rate band is currently £325,000, and in qualifying circumstances a further £175,000 residence nil-rate band may be available when a qualifying home passes to direct descendants. Unused allowances can also potentially transfer between spouses or civil partners.

Transfers between spouses or civil partners are also generally exempt, although cross-border couples need to be particularly careful where one spouse is a long-term UK resident and the other is not, because the spouse exemption can be restricted in those circumstances.

Could another country tax the estate as well?

Potentially.

The country in which you are living — or the country in which an asset is situated — may have its own inheritance, succession, estate or gift tax regime.

So it is possible for more than one jurisdiction to have taxing rights over the same estate.

The UK has inheritance tax treaties with a limited number of countries, and other forms of double-tax relief can sometimes provide a credit where the same asset suffers tax in two jurisdictions.

That is why international estate planning should rarely be looked at through a UK lens alone.

Leaving the UK is an event. Leaving the UK tax system can be a process.

That is probably the most important message.

Changing your address, obtaining residency overseas and becoming non-UK tax resident for income tax purposes does not necessarily mean every historic connection with the UK tax system immediately ends.

Inheritance tax is a particularly good example.

For someone who has spent most of their life in Britain, there may be a ten-year journey between leaving the UK and their worldwide estate potentially moving outside the UK inheritance tax regime.

And during that period their circumstances can change enormously — property can be sold, investments restructured, pensions accessed, gifts made and wealth transferred between generations.

Understanding the timeline therefore matters.

Good cross-border financial planning is not simply about asking:

“Where do I live today?”

It is also about asking:

“Where have I been resident, for how long, where are my assets, and when do the different tax rules stop applying to me?”

Those dates can make an enormous difference. Reach out to us for an informal discussion and let us help.

https://calendly.com/steve-atlasbridgewealth

This article is intended as general information only and should not be regarded as personal tax, legal or financial advice. UK inheritance tax and overseas succession rules can be complex and individual circumstances should be reviewed with suitably qualified UK and local tax/legal professionals.