From 6 April 2025 the UK stopped using domicile to decide who pays inheritance tax on worldwide assets. It now uses residence: if you have been UK resident in at least 10 of the previous 20 tax years, your entire estate sits in the UK IHT net, and leaving the country does not switch that off at once. That second point is the trap. A long-term resident who moves abroad, even to a zero-tax hub like the UAE, stays exposed to 40% UK inheritance tax on worldwide assets for a further three to ten tax years. This guide explains the long-term-resident test, the tail after departure, what it means in practice, and the legitimate planning responses.
For the strategic options former non-doms are weighing as a whole, start with our pillar guide on UK non-dom alternatives in 2026. This post owns the inheritance-tax mechanics; the pillar maps the wider route.
Key Takeaways
- Worldwide UK inheritance tax now turns on residence, not domicile: you are caught once you are a long-term resident, defined as UK resident in at least 10 of the last 20 tax years (GOV.UK, 2026).
- The rate is 40% above the nil-rate band; the band is GBP 325,000, the residence nil-rate band GBP 175,000, both frozen to 5 April 2031 (GOV.UK, 2025).
- Leaving the UK starts a tail of 3 to 10 tax years during which worldwide assets stay in scope; it resets only after 10 consecutive non-resident years (HMRC IHTM47020, 2026).
- Moving to the UAE is not an instant escape: the tail follows your residence history, not where you or the assets now sit.
- Two exceptions matter: a 30 October 2024 transitional carve-out and the pre-1975 India and Pakistan estate-duty treaties. Both are fact-specific and need regulated advice.
General information current to June 2026. It is not personalised advice, and inheritance-tax planning is regulated; take advice on your own facts.
What changed: from domicile to residence?
The connecting factor for worldwide UK inheritance tax changed on 6 April 2025. Domicile and deemed-domicile no longer decide whether your non-UK assets are taxed; a residence test does (HMRC IHTM47001, 2026). Before that date, a non-dom paid UK IHT only on UK-situs assets. After it, once you meet the long-term-resident test, your worldwide estate is in scope at the same 40% rate.
Here is what people most often get wrong. Non-dom abolition was not one change to one tax. Income and gains moved to a new four-year regime for new arrivals; inheritance tax moved separately to the long-term-resident test. The two reforms share a start date and a direction of travel, but the thresholds differ. So a planner who borrows the income-tax timing for an IHT question will reach the wrong answer.
Domicile is not entirely dead, though. It no longer determines worldwide IHT scope, but it survives in limited transitional and treaty contexts, and in some spousal elections. Those pockets are narrow, and they are where most of the genuine planning questions now sit. We come to the most important of them, the old estate-duty treaties, further down.
Citation capsule: From 6 April 2025 the UK decides worldwide inheritance-tax exposure by residence, not domicile: deemed-domicile is abolished for IHT and replaced by a long-term-resident test, so a former non-dom's non-UK assets enter the 40% net once they qualify (HMRC IHTM47001; GOV.UK, 2026). Domicile survives only in limited transitional and treaty contexts.
Who is a long-term resident under the 10-of-20 test?
You are a long-term resident if you have been UK resident in at least 10 of the previous 20 tax years, and that status puts your worldwide estate in the UK inheritance-tax net (GOV.UK, 2026). The test is mechanical and rolling. It looks back across a 20-year window and counts the tax years in which you were UK resident under the Statutory Residence Test.
Whether you are UK resident in any given year is decided by the Statutory Residence Test, which this post does not redefine; for that mechanism see our guide to UK non-dom status in 2026. What matters for inheritance tax is the count. Ten qualifying years inside the rolling 20-year window flips you from UK-situs-only exposure to worldwide exposure. Nine does not. The line is sharp, and it can be crossed simply by staying another tax year.
Treat the test as a moving counter rather than a label. Deemed-domicile was sticky and hard to shed once acquired. Long-term-resident status behaves differently: it tracks your recent residence history and changes as years roll in and out of the window. That is why the practical question has become "how many of the last 20 years, and is the next one a tipping point?" rather than "where am I domiciled?"
Citation capsule: A long-term resident is someone UK resident in at least 10 of the previous 20 tax years; that status brings the worldwide estate into UK inheritance tax at 40%, replacing the old deemed-domicile concept from 6 April 2025 (GOV.UK, 2026). Residence for each year is determined by the Statutory Residence Test, and the 20-year window rolls forward annually.
How long does UK IHT follow you after you leave: the 3 to 10 year tail?
Leaving the UK does not end worldwide inheritance-tax exposure at once. A departing long-term resident stays in the IHT net for a tail of between 3 and 10 tax years, set by how many years they were resident; the clock runs from the year they become non-resident (HMRC IHTM47020, 2026). The minimum is three years; the maximum is ten.
The mechanism is a sliding scale. Ten to thirteen years of residence in the prior 20 gives the minimum three-year tail. Each additional year of residence adds one year to the tail, up to a cap of ten years for those resident 20 or more years. The status then resets only after ten consecutive non-resident years, at which point the worldwide exposure finally falls away.
| Years UK resident (in prior 20) | Years worldwide assets stay in the IHT net after leaving |
|---|---|
| 10 to 13 | 3 (minimum) |
| 14 | 4 |
| 15 | 5 |
| 16 | 6 |
| 17 | 7 |
| 18 | 8 |
| 19 | 9 |
| 20 or more | 10 (maximum) |
Mechanism: minimum 3-year tail at 10 to 13 years, plus one year per additional year of residence, capped at 10 years. Intermediate steps follow HMRC's stated rule rather than separately worked examples. Source: HMRC IHTM47020, 2026.
Specialist flag, the 30 October 2024 carve-out. There is a transitional exception that you must not generalise. Someone who was already deemed-domiciled on 30 October 2024 and who becomes non-resident after 6 April 2025 may have only a 3-year tail under the transitional rules, rather than the full sliding scale (HMRC IHTM47023, 2026). Do not assume this applies to you. It is fact-specific, it turns on your position on that exact date, and it needs specialist advice before anyone relies on a three-year figure.
Citation capsule: After leaving the UK, a long-term resident's worldwide estate stays in the inheritance-tax net for a tail of 3 to 10 tax years: three years at 10 to 13 years of residence, rising by one year per extra residence year to a 10-year cap at 20-plus years, resetting only after 10 consecutive non-resident years (HMRC IHTM47020, 2026).
For how the same residence shift reshaped offshore trust protection, which uses a similar long-term-resident test at each charge, see our note on UK offshore trust changes in 2026.
What does this mean in practice for someone leaving for the UAE?
In practice, worldwide assets of a long-term resident are taxed at 40% above the nil-rate band on death, and a move abroad does not change that during the tail. The nil-rate band is GBP 325,000 and the residence nil-rate band a further GBP 175,000, both frozen to 5 April 2031, with the residence band tapering away above a GBP 2,000,000 estate (GOV.UK, 2025). For large estates, both bands are small relative to the exposure.
This is where the most expensive misunderstanding lives. The reasoning goes: the UAE has no inheritance tax, so moving there removes the problem. It does not. UK inheritance tax attaches to your connection with the UK, here your residence history, not to where you die or where your assets are held. So a long-term resident who dies in Dubai within the tail, holding worldwide assets, faces the full UK 40% charge. The UAE's zero rate gives nothing to set against it.
The freeze compounds the effect. With the nil-rate band held at GBP 325,000 and the residence band at GBP 175,000 until 5 April 2031, rising asset values push more of each estate above the bands over time. The Henley and Partners Private Wealth Migration Report 2025, a forecast from a private advisory firm, projects the UK losing a net 16,500 millionaires in 2025, with the UAE the world's top projected inflow at 9,800 (Henley and Partners, 2025). Those are projections, not recorded departures, but they show the direction of travel and explain why the tail matters to so many families.
Treaty exception, the biggest single exception to "long-term resident equals worldwide IHT." The pre-1975 UK estate-duty double-tax treaties with India and Pakistan, and also with France and Italy, were not amended by the 2025 reform, and the Chancellor confirmed them unchanged on 23 January 2025 (GOV.UK, 2025). For a long-term resident whose domicile of origin is Indian or Pakistani, these treaties can limit UK inheritance tax to UK-situs assets, leaving non-UK assets outside the charge even though the headline residence rule would otherwise catch them. This is the survival of domicile in a treaty context. It may apply, it is highly fact-specific, and advice is essential before anyone relies on it.
Citation capsule: A long-term resident's worldwide estate is taxed at 40% above a frozen GBP 325,000 nil-rate band and GBP 175,000 residence nil-rate band, with the residence band tapering above a GBP 2,000,000 estate (GOV.UK, 2025). Moving to the UAE gives no shelter, because UK inheritance tax follows the person's residence history, not where they die.
What planning responses are available?
Legitimate planning is about timing and structure, not avoidance, and several tools remain available within the rules. Lifetime gifts can fall outside the estate if the giver survives seven years under the potentially-exempt-transfer rules, and life cover can fund a known liability (GOV.UK, 2026). For long-term residents, the timing of any departure against the tail is itself a planning variable. None of this is a loophole; all of it needs regulated advice.
Excluded-property trusts still have a role, but the test changed. Protection now depends on whether the settlor is a long-term resident at each chargeable event, not on domicile, so assets settled while the settlor is not a long-term resident can stay excluded. We cover that mechanism, including the 30 October 2024 transitional cap, in our note on UK offshore trust changes in 2026. The headline point is that timing relative to your long-term-resident status now drives the outcome.
Once you are genuinely outside the tail, after the worldwide exposure has fallen away, a UAE foundation can hold and pass on non-UK assets outside the UK net, alongside its succession and asset-protection roles. The choice of vehicle and jurisdiction sits in two sibling guides: family investment company versus foundation in 2026 and DIFC versus ADGM foundation in 2026. A foundation is a structuring tool, not an IHT eraser, and it does nothing to shorten the tail itself.
Citation capsule: Planning responses are about timing and structure within the rules: seven-year potentially-exempt gifts, life cover to fund a known liability, and excluded-property trusts whose protection now depends on the settlor not being a long-term resident at each chargeable event (GOV.UK, 2026). A UAE foundation helps only once a leaver is genuinely outside the tail.
To map your residence history, tail and options to a structure before you act, you can talk to Ancova about protecting your wealth. Inheritance-tax planning is regulated, and the right move depends entirely on your own facts and dates.
Frequently asked questions
Does moving to Dubai stop UK inheritance tax?
No, not immediately. If you are a long-term resident, UK resident in at least 10 of the last 20 tax years, your worldwide estate stays in the UK inheritance-tax net for a tail of 3 to 10 years after you leave (HMRC IHTM47020, 2026). The UAE levies no inheritance tax, so it offers no shelter against the UK 40% charge during the tail.
What is a long-term resident for UK inheritance tax?
A long-term resident is a person who has been UK resident in at least 10 of the previous 20 tax years (GOV.UK, 2026). From 6 April 2025 that status, not domicile, brings your worldwide estate into UK inheritance tax at 40%. Residence for each year is judged by the Statutory Residence Test across a rolling 20-year window.
How long does the UK inheritance-tax tail last after leaving?
Between 3 and 10 tax years, depending on how long you were resident. Ten to thirteen years of residence gives a 3-year tail; each further year adds one, capped at 10 years for 20 or more years of residence (HMRC IHTM47020, 2026). The status resets only after 10 consecutive non-resident years. A 30 October 2024 transitional carve-out may shorten this; take advice.
Do the India and Pakistan inheritance-tax treaties still apply?
Yes, they were not amended by the 2025 reform, and the Chancellor confirmed them unchanged on 23 January 2025 (GOV.UK, 2025). For a long-term resident with an Indian or Pakistani domicile of origin, the pre-1975 estate-duty treaties can limit UK inheritance tax to UK-situs assets. This is highly fact-specific, so advice is essential.
What are the UK inheritance-tax thresholds in 2026?
The rate is 40% above the nil-rate band of GBP 325,000, with a residence nil-rate band of a further GBP 175,000 that tapers away above a GBP 2,000,000 estate (GOV.UK, 2025). Both bands are frozen until 5 April 2031, so rising asset values draw more estates above them over time.
Sources
- GOV.UK, "Inheritance Tax if you're a long-term UK resident," retrieved 13 June 2026, https://www.gov.uk/guidance/inheritance-tax-if-youre-a-long-term-uk-resident
- HMRC, Inheritance Tax Manual IHTM47020, "Long-term UK residence: the rules," retrieved 13 June 2026, https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47020
- HMRC, Inheritance Tax Manual IHTM47001, "Domicile and long-term residence: introduction," retrieved 13 June 2026, https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47001
- HMRC, Inheritance Tax Manual IHTM47023, "Transitional rules and charges from 6 April 2025," retrieved 13 June 2026, https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47023
- GOV.UK, "Autumn Budget 2024: Overview of tax legislation and rates," nil-rate band and residence nil-rate band frozen to 5 April 2031, retrieved 13 June 2026, https://www.gov.uk/government/publications/autumn-budget-2024-overview-of-tax-legislation-and-rates-ootlar
- GOV.UK, "Inheritance Tax: Double Taxation Relief," covering the pre-1975 estate-duty treaties with India, Pakistan, France and Italy, retrieved 13 June 2026, https://www.gov.uk/government/publications/inheritance-tax-double-taxation-relief
- GOV.UK, "How Inheritance Tax works: thresholds, rules and allowances, gifts," retrieved 13 June 2026, https://www.gov.uk/inheritance-tax/gifts
- Henley and Partners, "Private Wealth Migration Report 2025" (forecast, private advisory firm; projections not recorded departures), retrieved 13 June 2026, https://www.henleyglobal.com/publications/private-wealth-migration-report-2025
Written by
Amine Derag
Director of Strategy, Ancova Associates
Amine Derag is Director of Strategy at Ancova Associates, the Dubai advisory firm for company formation, residency, citizenship by investment, and cross-border tax structuring. He advises founders and private clients relocating to the UAE on how a UAE structure interacts with their home-country tax and reporting obligations.
Connect on LinkedInThis article is general information for educational purposes only and is not legal, tax, financial, or immigration advice. Investment thresholds, processing times, and program terms change — speak with a qualified Ancova adviser before acting.
