The UK’s inheritance tax reform effective from April 2025 shifts the rules from domicile to residency.
Here’s what British expats need to know and how to act now.
The UK government’s landmark inheritance tax reform, announced in the Autumn Budget 2024, marks one of the most significant changes to the IHT system in decades.
As of 6 April 2025, the tax framework will no longer be determined by domicile but by residency, a move that has profound implications for British citizens living overseas.
This shift could dramatically reduce inheritance tax exposure for long-term expats, particularly those with considerable non-UK assets. But taking advantage of the reform requires careful planning, expert advice, and, most importantly, timely action.
Under the current system, individuals who are UK-domiciled are subject to inheritance tax on their entire global estate, regardless of where they live.
This can result in up to 40% of an expat’s worldwide wealth being taxed, even when most of it is held abroad.
From 6 April 2025, the UK has switched to a residency-based inheritance tax system. The key rule is:
“If an individual has been non-UK tax resident for at least 10 consecutive years, their non-UK assets will no longer be liable for UK inheritance tax.”
This change breaks the long-standing link between domicile and IHT liability and creates major planning opportunities for international families.
The UK’s inheritance tax reform in 2025 hinges on a critical distinction: domicile versus residency.
While these terms may sound similar, they carry very different legal and tax implications.
Domicile is a legal concept reflecting where you consider your permanent home to be. It is not necessarily where you currently live.
There are three types of domicile in UK law:
Crucially, even if you leave the UK, you may still be considered UK-domiciled unless you take specific legal and lifestyle steps to sever ties and prove you’ve established a new permanent home elsewhere.
This is why many long-term expats remain within the UK IHT net, because they haven’t lost their UK domicile in the eyes of HMRC.
Residency refers to where you live for tax purposes and is usually determined by the number of days spent in the UK each tax year.
UK tax residency is assessed using the Statutory Residence Test (SRT), which considers:
From April 2025, it is this residency status, not your domicile, that determines whether your non-UK assets are subject to UK inheritance tax.
Do you Still Have Questions About the inheritance tax reform?
Let’s look at how the inheritance tax reform affects a typical expat with John in Switzerland.
Scenario:
John is a British national who has lived in Zürich for 12 years. He owns:
Under the Current System:
Under the 2025 Reform:
Major Savings On Non-UK Assets
Expats who meet the 10-year non-residency threshold will exclude non-UK assets from the IHT net, often saving families millions in unnecessary tax.
Estate Planning Now Matters More Than Ever
This change presents a unique planning window, but also demands thorough documentation, accurate residency records, and expert financial and legal guidance.
If you’ve already been non-UK tax resident for 10+ years, your non-UK assets will likely be excluded from IHT after April 2025.
Now is the time to review your estate structure, verify your residency status, and ensure your documentation is airtight.
Those who have been non-UK tax resident for 10+ years should review their estate plans now to ensure:
If you’re considering a move abroad, starting the 10-year clock now could mean significant tax advantages later. This makes timing and pre-move planning critical.
British expats in Switzerland, where many hold substantial CHF or EUR-denominated assets, are especially well-placed to benefit from the inheritance tax reform.
Switzerland’s stable legal and financial environment, paired with the new UK residency-based rules, presents a dual advantage for wealth protection.
We, at Private Client Consultancy, specialise in navigating cross-border estate planning, particularly between Switzerland and the UK.
We help clients create robust structures to legally minimise tax and protect their legacy with peace of mind.
Inheritance tax planning has always been complex, but with this new system, it’s essential to:
The 2025 inheritance tax reform represents a turning point in cross-border tax planning.
For British expats and global families, this is a moment of opportunity, but it requires strategic foresight and professional support.
Schedule a consultation with your next international financial planner today to explore how this reform could impact your estate, and how to take full advantage of it.
Disclaimer: Tax laws, rates, and reliefs are subject to change and may vary depending on individual circumstances and residency status. Any information provided on this website is based on our understanding of current regulations (or the date of when the content was published) and should not be considered personalised financial or tax advice. As tax obligations can differ across regions, countries and evolve over time, we strongly recommend seeking professional advice tailored to your specific situation before making any financial decisions.
Wealth Management With
Peace of Mind
All content © Private Client Consultancy. All rights reserved. 2025
Get notified about new articles, latest changes and much more