IHTM47050 - Long-term UK residence test: Foreign settled property

From 6 April 2025 the excluded property (IHTM04251) status of foreign settled听property (IHTM04271)听will not depend upon the settlor鈥檚 domicile status at the听time听the assets are added to the settlement.听

Instead, assets comprised听in a settlement will only be excluded property at听times when the settlor is not long-term UK resident (IHTM47000).听

For qualifying interest in possession settlements, the circumstances of both the settlor and interest in possession beneficiary are relevant (IHTM47051).听

When a settlor is long-term UK resident, any assets they have settled (even if听settled when not long-term UK resident or domiciled outside the UK听(IHTM13000) will not be excluded property.听

This test will apply to all settlements regardless of when the property became听comprised in the settlement, subject to the provision for deceased settlors听outlined below.听听

There are also transitional rules to relieve excluded property听which was comprised听in a settlement at听30 October 2024 from certain charges听(IHTM47051).听

Deceased settlors听

Where the settlor of a trust dies on or after 6 April 2025, the excluded听property status of foreign settled property will depend on the settlor鈥檚 long-term residence status at their death:听

  • If they were not long-term UK resident when they died, then foreign听settled property will be excluded property for the duration of the trust.听

  • If they were long-term UK resident when they died, then all UK and non-UK settled assets will be in scope for IHT for the duration of the trust.听

Where the settlor of a trust has died before 6 April 2025,听foreign settled property will be excluded property based on the old test,听which is whether听the settlor was not domiciled in the UK听at the time the property became comprised听in the settlement.听

Qualifying interests in possession听

In cases where there is an individual entitled to a qualifying interest in听possession (IHTM16060) in circumstances which mean they are deemed to听own the settled property in which their interest subsists (IHTM16061), there is听an additional requirement that the individual entitled to the qualifying interest听in possession is not a long-term UK resident (IHTM47051). This听requirement does not apply where the settlor of the trust died before 6 April听2025.