IHTM47021 - Long-term UK residence test: Transitional provisions

The long-term UK residence test comes into听force on 6 April 2025.听听听

There are听transitional provisions听for non-domiciled (IHTM13000)听or deemed听domiciled听()听individuals who are non-UK resident听in 2025-26. For those individuals, they will be long-term UK resident听(IHTM47000)听if they satisfy the existing deemed domicile test (),听namely whether they have been resident for at least 15 out of the 20 tax years immediately听preceding the year of charge, and for at least one of the four tax years ending with the relevant tax year.听听If they become UK resident again in 2026-27 or after, the new long-term UK residence rules will apply听to them.听听

This transitional provision will not apply to individuals who are UK domiciled under common law on 30 October 2024 and the new long-term听UK听residence test will apply to them from 6 April 2025.听听An individual will听be 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 (IHTM47001).听听听听

This means that:听

  • An individual who is not domiciled or deemed听domiciled in the UK on 30 October 2024 who becomes non-resident in 2025-26 will not be a long-term UK resident (however, if听they return to the UK the听usual听long-term听UK听residence test听will apply).听

  • An individual who is deemed听domiciled in the UK on 30 October 2024 who becomes non-resident in 2025-26 will be a long-term UK resident until the start of their fourth year of non-residence (however, if听they return to the UK the usual听long-term UK residence test will apply).听

Example听听

Nicholas听is UK domiciled but became non-UK resident in 2009-10.听He听is UK domiciled under common law at听30 October 2024, the transitional provision听does听not apply to him.听听

However, Nicholas听is not a long-term UK resident听because in 2025-26听Nicholas was not UK听resident for 10 out of the previous听20 tax years.听 He will not be subject to UK听Inheritance Tax听on his听foreign听personally held听assets听if he remains听non-resident.听

Any foreign assets Nicholas听settled into a trust听would be relevant property up until 6 April 2025听(IHTM47023). They would become excluded听property听on that date听because Nicholas听is not long-term UK resident.听 There听will be a proportionate charge听(IHTM42110) on 6 April 2025. Following that proportionate charge, as Nicholas听is not a long-term UK resident, any foreign assets he settled into trust would be out of scope for Inheritance Tax听from 6 April 2025听unless Nicholas becomes long-term UK resident in the future.听

Example听

Anil is non-domiciled on 30 October 2024 and was UK resident for 11 years, becoming non-resident in 2025-26.听听听听

He never became deemed domiciled and, under the transitional provision听would not come into the scope of Inheritance Tax听on his non-UK assets from 6 April 2025.听听听听

If Anil returned to the UK, the new long-term UK residence rules would apply to him. He would be subject to the 10 out of 20 years听long-term UK听residence test, which includes the years of residence in the UK up to 2024-25.听

Example听

Carina lived in the UK from 2005-06听and becomes non-resident in 2024-25. Carina was deemed听domiciled in the UK on 30 October 2024 because she had been resident for 19 out of 20 tax years.听 Under the transitional provision she will be a long-term UK resident until听2027-28听because at that time she will听satisfy the requirement for her to have been non-resident in the four years ending with the year 2027-28听.听If Carina returned to the UK, the new long-term UK residence rules would apply to her.听 She would be subject to the 10 out of 20 years long-term UK residence test, which includes the years of residence in the UK up to 2023-24.