IHTM47001 - Long-term UK residence test: Introduction and when domicile will remain relevant
Source: gov.uk (2025-04-07)


From 6 April 2025, Inheritance Tax moved from being based on domicile (IHTM13000 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm13000)) to being based on long-term UK residence (IHTM (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47000)47000 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47000)). An individual is a long-term UK resident if they have been resident in the UK for at least 10 out of the last 20 tax years immediately preceding the tax year in which the chargeable event (including death) arises. Where an individual is a long-term UK resident and becomes non-UK resident, they will remain in scope for inheritance tax for a minimum of 3 years and a maximum of 10 years depending on the amount of time they resided in the UK (IHTM47 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47020)202 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47020))

Domicile will remain relevant:

for deaths and lifetime transfers of value prior to 6 April 2025;

where the common law concept of domicile arises such as within designated Double Taxation Conventions (IHTM27161 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm27161)), and;

for property comprised in a settlement, domicile will remain relevant:

for charges which arise before 6 April 2025,

where the settlor died before 6 April 2025, or

where transitional provision for gifts with reservation of benefit or qualifying interest in possession charges apply.

If these circumstances apply, please refer to Chapter 13: Domicile (IHTM13000 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm13000))

The following summarises when chargeability of foreign property depends on long-term UK residence or domicile.

Foreign unsettled property (IHTM04260 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm04260))

For deaths and lifetime transfers of value on or after 6 April 2025, foreign property will be chargeable if the deceased was a long-term UK resident immediately before their death or the transfer.

For deaths and lifetime transfers of value before 6 April 2025, foreign property will be chargeable if the deceased was domiciled in the UK immediately before their death or the transfer.

Foreign settled property (IHTM04271 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm04271))

Where a settlement has a living settlor, charges on foreign settled property which arise on or after 6 April 2025 will depend upon whether the settlor is a long-term UK resident at the time of the charge.

Where a settlor died on or after 6 April 2025, charges on foreign settled property which arise on or after 6 April 2025 will depend upon whether the settlor was a long-term UK resident immediately before their death.

Where a settlor died before 6 April 2025, charges on foreign settled property which arise on or after 6 April 2025 will depend upon the domicile of the settlor at the time the property became comprised in the settlement.

For qualifying interest in possession trusts there is an additional test from 6 April 2025. Property comprised in the settlement is only excluded property if both the settlor and interest in possession beneficiary are not long-term UK resident at the time of the chargeable event.

Charges on foreign settled property which arise before 6 April 2025 will depend upon the domicile of the settlor at the time the asset became comprised in the settlement.

There will be occasions where some foreign property may still be chargeable even if the individual (or settlor) is not a long-term UK resident or, when still relevant, non-domiciled. This will include, for example, cases where the value of the foreign property includes value attributable to UK residential property (IHTM43011 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm43011)) whether comprised in a settlement or not.

Transitional provisions

Where excluded property was comprised in a settlement on or before 30 October 2024, it will not be subject to charge under the gift with reservation provisions, on death, where the property remains settled property and is situated outside the UK at the time of the chargeable event (See further guidance at IHTM47 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47060)060 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47060)).

Where excluded property is comprised in a qualifying interest in possession settlement before 30 October 2024, it will not be subject to certain charges under the interest in possession regime where the property is situated outside the UK at the time of the chargeable event (See further guidance at IHTM47051 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47051)).

In both cases, whether the foreign property comprised in the settlement at 30 October 2024 was excluded property will depend on the domicile (IHTM13000 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm13000)) of the settlor at the time the property became comprised in the settlement.

Double taxation conventions

Domicile may remain relevant where there is an existing double taxation convention in operation between the UK and the relevant foreign country and its terms use the concept of common law domicile (see IHTM47070 (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47070) and IHTM27161) (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm27161).