IHTM47001 - Long-term UK residence test: Introduction and when domicile will remain relevant
From 6 April 2025, Inheritance Tax moved from being based on domicile听(IHTM13000)听(to听being based on long-term UK residence听(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听preceding the tax year in which the chargeable event (including death) arises.听 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听in the UK听(IHTM47202)听
Domicile will remain relevant:听听
for deaths and lifetime transfers of value prior to 6 April 2025;听听
where the common law concept of domicile arises such as within designated Double Taxation Conventions听(IHTM27161),听and;听
for property comprised听in a settlement, domicile will remain relevant:听
for charges which arise before 6 April 2025,听
where the settlor died before 6 April 2025,听or听听
where transitional provision for gifts听with reservation of benefit or qualifying interest in possession charges apply.听
If these circumstances apply, please refer to:听Chapter 13: Domicile听(IHTM13000)听
The following summarises听when chargeability of foreign property depends on long-term UK residence or domicile.听
Foreign unsettled property听(IHTM04260)听
For deaths and lifetime transfers of value on or after 6 April 2025, foreign property听will be chargeable if the deceased was a long-term UK resident听immediately听before their death听or the transfer.听
For deaths and lifetime transfers of value before 6 April 2025, foreign property听will be chargeable if the deceased was domiciled听in the UK听immediately听before their death听or the transfer.听
Foreign settled property听(IHTM04271)听
Where a settlement has a living settlor, charges on foreign settled property听which arise on or after 6 April 2025听will depend upon听whether the settlor听is a long-term UK resident听at the time of the charge.听
Where a settlor died on or after 6 April 2025, charges on foreign settled property听which arise on or after 6 April 2025 will depend upon whether the settlor was听a long-term UK resident听immediately听before their death.听
Where a settlor died before 6 April 2025, charges on foreign settled property听which arise on or after 6 April 2025 will depend upon the domicile听of the settlor at the time the property听became comprised听in the settlement.听
For qualifying interest in possession trusts there is an additional听test from 6 April 2025.听 Property comprised听in the settlement is only excluded property if both the settlor听and interest in possession beneficiary are not long-term UK resident听at the time of the chargeable event.听
Charges on foreign settled property which arise before 6 April 2025 will depend upon the domicile听of the settlor听at the time the asset became comprised听in the settlement.听
There will be occasions听where some foreign property may still be chargeable even if the individual (or settlor) is not听a long-term UK resident听or, when听still relevant,听non-domiciled. This will include, for example,听cases where the value of the foreign property听includes听value attributable听to UK residential property听(IHTM43011)听whether comprised听in a settlement or not.听
Transitional provisions听
Where excluded property was comprised in a settlement on or before听30 October 2024, it will not be subject to charge under the gift with reservation provisions,听on death,听where the property remains听settled property听and is situated outside the UK at the time of the chargeable event听(See further guidance at听IHTM47060).听
Where excluded property is comprised听in a qualifying interest in possession settlement before 30 October 2024,听it will not be subject to certain charges under the interest in possession听regime听where the property is situated outside the UK at the time of the chargeable event听(See further guidance at听IHTM47051).听听听听
In both cases, whether the foreign property comprised听in the settlement at听30 October 2024 was excluded property听will depend on the domicile听(IHTM13000) of the settlor听at the time the property became comprised听in the settlement.听
Double taxation听conventions听
Domicile听may remain relevant where there is an existing double taxation听convention听in operation听between the UK and the relevant foreign country听and its terms use听the concept of common law domicile听(see IHTM47070听and IHTM27161).