Inheritance Tax for UK Nationals Living Abroad: The Newly Introduced Residence-Based Regime
05/28/2025, Paphos 8035 // PRODIGY: Feature Story //
Following Labour's formation of a new government, Chancellor Rachel Reeves hinted strongly at proposals to rethink inheritance tax exposure for long-term overseas expatriates. This was borne out in the announcements made during the Autumn Budget, which came into force at the start of the 2025-26 tax year.
Coupled with reforms to the non-dom tax regime and Overseas Transfer Taxation on cross-border pension transfers , these changes may significantly impact the tax planning and decisions made by expatriates splitting their time between the UK and other countries, and where they choose to base their primary homes.
Chase Buchanan Wealth Management , an international group of accomplished wealth managers and financial advisers, has explained the changes, how they may affect expatriates, and how the new residence-based inheritance tax scheme will work.
Changes to the UK's Domicile-Based Inheritance Tax System
Domiciliary status has long been a headache for expatriates, many of whom continued to bear some exposure to UK inheritance tax long after they had relocated overseas and settled as permanent tax residents in other jurisdictions.
That is because changing domicile can be complex and costly, and a proportion of expatriates simply didn't realise that their tax residency and domiciliary positions were two very different things, leaving families and heirs with sizable inheritance tax burdens they hadn't planned for.
From this tax year onward, the positive is that your domiciliary status is no longer relevant. Instead, HMRC will assess the inheritance tax liabilities linked to an estate based on how long the individual had been an overseas resident.
Currently, that means any UK citizen who has lived continuously overseas since 5th April 2015 or earlier will not have a UK inheritance tax obligation linked to assets based in another country. The exclusions apply to assets based in the UK, including residential real estate assets, which may still be subject to the tax.
The idea is that once a long-term overseas expat has been a resident elsewhere for 10 years, their estate and beneficiaries will no longer be liable for UK inheritance tax against their non-UK assets. However, the opposite also applies. Therefore, non-UK assets will fall within the scope of British inheritance tax following ten years of UK residency if a foreign national from elsewhere, or a British expat, decides to return.
How British Expats Will Be Assessed for UK Inheritance Tax Going Forward
It is essential to reiterate that the new scheme does not mean that being classed as an overseas resident automatically exempts any British citizen, and their estate, from inheritance tax. Instead, it means that when an expatriate settles in another country, their assets outside of the UK may be excluded from the scope of UK inheritance tax from ten years onward.
Much will depend on the specifics of their tax residency position and whether they meet the criteria to be considered long-term overseas residents.
This is ascertained using the Statutory Residence Test, which HMRC and the UK authorities already use to determine whether an individual is a tax resident in the UK and, therefore, subject to British taxation against their worldwide income and assets.
Other countries use similar rules to decide whether a foreign national resident is exposed to domestic tax only on their locally based assets and income sources, or against all of their wealth and earnings.
While the system is fairly complex and involves a series of tests, which look at aspects such as the individual's primary home, where their main income arises, the location of their immediate family members, and their investment or business interests, the Chase Buchanan team can, of course, assist with this.
What Does a Residence-Based UK Inheritance Tax System Mean for Expatriates?
The ramifications may vary between individual estates, families, and taxpayers. Still, the immediate takeaway, as we've mentioned, is that a person who has lived abroad for at least ten years is unlikely to now have any inheritance tax levied on their estate, at least against assets held outside of the UK.
Likewise, an expatriate might decide to restructure their assets, set up trusts and other funds, and gift non-UK assets to loved ones and family members without any concerns about how this could affect their beneficiaries' future tax liabilities.
We also expect these reforms to have a material effect on decision-making, particularly for expatriates who may have been considering a return to the UK and those currently planning a relocation and making decisions about whether to liquidate, sell, or transfer UK assets to another tax jurisdiction.
That said, it remains crucial to be conscious of succession, inheritance, wealth, and estate taxes in other countries. Being exempt from UK inheritance tax or with a minimal liability by no means limits the tax obligations that could arise in a person's country of residency or affect their nominated heirs.
Expatriates who opt to remain non-UK tax residents may no longer need to factor in UK inheritance tax or make decisions about whether to work through the process of establishing a new domicile. However, they will still need to ensure they are fully conscious of how the Statutory Residency Test works, and how, for instance, retaining a UK home may influence the outcomes of that assessment.
How Does the New Foreign Income and Gains Regime Factor Into Inheritance Tax Reforms?
As a final note, one of the additional announcements relates to the Foreign Income and Gains (FIG) regime, which also took effect from 6th April 2025. This rule means that expatriates who have been non-residents for ten continuous years and choose to return to the UK can take advantage of a four-year exemption.
During that initial four years, they may be able to claim UK tax relief against foreign incomes and gains, including those they receive personally and through a trust. This is in a bid to incentivise affluent expatriates to consider a return and make it more tax-efficient to relocate to the UK and bring investment assets and wealth with them.
As with all of the topics discussed here, the benefits, tax efficiencies, and impacts on your overall tax position should always be reviewed with help from an experienced global tax adviser.
Read more about Chase Buchanan - Experienced Tax Specialists at Chase Buchanan Wealth Management Reflect on the Changing 2025 Global Economic Landscape
About Chase Buchanan Private Wealth Management
Chase Buchanan is a highly regulated wealth management company that specialises in providing global finance solutions for those with a global lifestyle. We are global financial advisers, supporting expatriates around the world from our regulated European headquarters, and local offices across Belgium, Canada, Canary Islands, Cyprus, France, Malta, Portugal, Spain, UK and the USA.
All investments carry risk, including the potential loss of capital. You should carefully consider whether investing is suitable for you, taking into account your personal circumstances, financial situation, and risk tolerance.
Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15.
Source published by Submit Press Release >> Inheritance Tax for UK Nationals Living Abroad: The Newly Introduced Residence-Based Regime
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
42 minutes ago
- Yahoo
Amazon data centres to consume ‘as much electricity to power Burnley'
A complex of huge data centres being built by Amazon in Britain will consume as much electricity needed to power a town the size of Burnley, campaigners have claimed. The proposed data centres, near Houghton Regis in Bedfordshire, are projected to consume around 114.8 million kilowatt-hours (kWh) of electricity a year. This equivalent to the power consumed by more than 42,500 UK households, according to researchers at Global Action Plan, which is campaigning against the development. It exceeds the number of homes in Burnley, which stood at 41,955 after the most recent Census in 2021. Planning documents show the two data centres in the development will include 42 back-up diesel generators, each around 25 metres tall, that need to be fired up fortnightly to check they are working. It is estimated this will produce the same emissions as 1,079 homes heated by gas. The plans were lodged with Central Bedfordshire Council by Colliers Properties, a known partner of Amazon Web Services (AWS), the retail giant's cloud computing division. The documents name Amazon Data Services UK as the site's eventual operator. Known as Linmere Island, the project would sit on an empty 22-acre greenfield site. While the plans also include 140 solar panels, it is not clear how much power they will supply to the data centres. It comes amid growing pushback against a slew of 'hyperscale' data centre projects being lined up across Britain – a central part of the Prime Minister's strategy to boost economic growth – with campaigners raising concerns over their environmental impact. One complex near Blyth, Northumberland, is forecast to produce more greenhouse gas emissions than Birmingham Airport, which carries 12m passengers per year. Another in Elsham, Lincolnshire, is predicted to generate five times the carbon dioxide of the same airport. It underscores the challenge faced by Sir Keir Starmer as he battles to restore economic growth while hitting net zero targets. Data centres are vital to artificial intelligence, and were classed as critical national infrastructure last September, with Sir Keir establishing 'AI growth zones' to speed up such building projects. AWS set out plans last September to invest £8bn in the UK to build data centres. At the time, Tanuja Randery of AWS, said its strategy would help meet the 'growing needs' of its customers and 'support the transformation of the UK's digital economy'. The investment was hailed by Rachel Reeves, the Chancellor, as 'the start of the economic revival', and that it showed 'Britain is a place to do business'. But such developments require vast amounts of energy that puts it at odds with the Government's mission to become net zero by 2050. It has prompted Matt Garman, chief executive of AWS, to urge the UK to increase its supply of nuclear energy for data centres in an interview with the BBC last month. There are also mounting concerns over the amount of water that some data centres require to keep their computer banks cool enough to function properly. Oliver Hayes, head of policy and campaigns at Global Action Plan, said: 'It's astonishing that communities are expected to like it or lump it when it comes to this wave of giant data centres. 'Amazon is opaque about how much of Houghton Regis' water it will suck up in order to cool the IT equipment, but given this one data centre will require as much electricity as a town the size of Burnley, we can assume the pressure on local water supplies will be intense – to say nothing of the noise and air pollution caused by fortnightly testing of its 42 backup diesel generators.' Amazon declined to comment. Sign in to access your portfolio
Time Magazine
an hour ago
- Time Magazine
How U.S. Strikes May Have Helped the Iranian Regime
Governments are not nations, especially in the Islamic Republic of Iran, but governments wage the wars that can define a nation. Until 2:00 a.m. Iran Standard Time on Sunday, the conflict between America and Iran had remained on a low boil for a solid 45 years, flaring into actual military encounters only on the territory of others, notably Iraq. There, every sixth U.S. fatality perished by the efforts of Iran. President Donald Trump alluded to this history in announcing the U.S. air strikes on three nuclear facilities inside Iran—bringing the conflict to a regime that, even when it attacked the U.S., invariably arranged for someone else to do it. In Iraq, the U.S. was an army of occupation, and its soldiers obliged to patrol the roads. They did so in Humvees heavily armored against the roadside bombs insurgents planted along the route. Iran, which wanted U.S. troops off its doorstep, organized its own insurgents, and gave them a new kind of roadside bomb, a shaped charge that could send a slug of copper through any armor, including an M1 Abrams tank. The soldiers who survived often lost limbs. The U.S. Army history of the Iraq War takes note of the U.S. unit intercepting crates of the copper plates fitted atop the explosive: 'All were turned on the same lathe in Iran.' Israeli officials had been warning the Americans about those bombs. Their own troops had encountered them while occupying Lebanon, where the diabolically lethal innovations had been planted by Hezbollah, the militia Iran helped establish and subsequently armed. When the U.S. invaded Iraq in 2003, Tehran directed them to be used against an enemy it had been fighting, in one way or another, since 1979. Read More: Iran Delivers Furious Warning, Speaks of 'Unprecedented Level of Danger and Chaos' After 'Heinous' U.S. Strikes That was the year everyday Iranians rose up against the King (or Shah) who had been put in place a quarter century earlier by the U.S. and British, in a CIA-directed coup bringing down a democratically-elected government (one that had kicked a British oil company out of the country). A half century later, Iranian citizens could be relied upon to bring up the coup to American reporters doing in-person interviews on Tehran streets decorated with wartime propaganda. The entire side of a tall building in Tehran shows the American flag with the stars replaced by skulls and the stripes formed by descending bombs. The mural, which had faded over the decades, was redone with fresh paint a few months ago. The famous 'Death to America' slogan is still on the wall of the park-like compound that once held the U.S. Embassy. The place was officially dubbed 'the Den of Spies' when it was overrun by supporters of the regime that replaced the Shah—a revolutionary movement led by a charismatic Shi'ite cleric named Grand Ayatollah Ruhollah Khomeini. (TIME's Person of the Year in 1979 is not to be confused with his similarly named successor, 86-year-old Ali Khamenei, who finally has reportedly nominated his own candidates as successor.) The former embassy is now a museum and, as TripAdvisor makes clear, an effective one. When Iranians were coming over the gates, American diplomats and spies scrambled to feed secrets into paper shredders, reducing their secret documents to strips of paper maybe an eighth-of-an-inch wide. The zeal of the 1979 revolution is still visible on the tables of the Den of Spies, in the papers true believers re-assembled strand-by-strand. Over 50 U.S. diplomats remained in the embassy as hostages for 444 days. The humiliation the nascent Islamic Republic of Iran inflicted on the United States may have been on par with the humiliation the regime is experiencing now. The hitch, for both the U.S. and Israel, is that bringing the attack to Iran, as a country, risks stirring the nationalist response of a nation that goes back 2,500 years. Most Iranians loathe their government, and may have looked on with a certain interest on June 13, when the Israeli warplanes and drones descended, both from abroad and from a base Mossad set up near Tehran. (A joke making the rounds in Tehran had one of Iran's retaliatory strikes hitting the headquarters of Mossad, but it was empty: All the agents were inside Iran.) At the time its secret nuclear program was revealed in 2002, people still held out hope that they could alter their government at the ballot box. But the political reform movement failed, and the stiffening, increasingly unpopular regime understood that it could no longer count on its population. Instead, it placed its hopes for survival in thugs beating protesters in the streets, and acquiring a nuclear weapon. A large majority of Iranians have no love for the regime. In small towns and cities alike, they have been rising up against their oppressive government at irregular intervals, for decades. But any kind of bomb is terrifying, and after the first night of attacks, Israel's warplanes moved beyond military targets and assassinations. An oil refinery was bombed. The casualties of a strike on Tajrish Square, a bustling bazaar in Tehran's north, included a water main and a well-known graphic designer, who was waiting at a red light. The specter of Gaza now looms over every Israeli military operation. After Iran's retaliatory missiles claimed Israeli lives, Israel's defense minister threatened that 'Tehran will burn.' Inside Iran, opposing the government does not extend to supporting attacks by foreign militaries. A group of human rights, civil society, and political activists who, as they put it, 'have always been critical and opposed to the current wrong way of governing,' posted a statement on Telegram saying: 'At this critical juncture in our country's history, when we are confronted with the aggression and arrogance of the racist Israeli government, which has a long history of warmongering, genocide and breaking the fundamental principles of morality and international law, we firmly condemn this attack. We emphasize our serious opposition to any foreign interference. We consider it to be detrimental to the human rights and democracy-seeking efforts of Iranian civil society, and we stand united and steadfast in defending the territorial integrity, independence, national defense capability of our homeland, defending the lives and dignity of human beings, and peace in the region and the world.' Dread swelled in the neighborhoods around the Tehran atomic research reactor, with the distribution of iodide potassium pills to protect the thyroid against radiation in the air. Experts say the risk of radiation exposure is fairly small around the atomic facilities that the U.S. and Israel have bombed to date, because the ones in Fordow, Natanz, and Isfahan all deal with enriching uranium, rather than sparking nuclear reactions. But though small, the Tehran reactor (set up by the U.S. in 1967, when the Shah still ruled), operates as Chernobyl or Three Mile Island once did, and in the center of a city of more than nine million people. Those living closest to the reactor were told the pills should be taken by those over the age of 60 and under 40, but only when instructed by state TV, which Israel has also bombed. Read More: A New Middle East Is Unfolding Before Our EyesSo, where do things go from here? To a large extent, that depends on the actions of an Iranian regime that was already unpopular at the start of this assault. But any government bringing its own military inside Iran's borders should understand the nature of the country. Among Iranians, opposition to the government is grounded in a bedrock pride in their nation, which predates not only the Islamic Republic, but Islam itself. Some on the Iranian plateau still practice Zoroastrianism, the world's first monotheistic faith, and the foundation for an ancient empire that still informs Iranians' sense of themselves. That identity can be glimpsed in first names like Darius and Cyrus—the names of Persian emperors—and actually visible in the ruins of Persepolis. There, in the friezes depicting supplicants from nations lining up to pay fealty to the ruler of an ancient empire, some Iranians find themselves seeing the nuclear program exactly as the modern regime has cast it—as the 'inalienable right' of any signatory to Non Proliferation Treaty to pursue a nuclear program, so long as it's in Tehran, there was evidence the regime was gaining ground with a public it had largely lost. In a private chat, a university professor told a friend: "Even if Khamenei had packed up the whole nuclear program, Israel would have attacked. Their whole plan was to weaken Iran's military."
Yahoo
2 hours ago
- Yahoo
See how much an investor needs in an ISA to fund an £888 monthly passive income
Passive income has always struck me as the holy grail of investing. A regular payment landing in my account, without me having to lift a finger. Ideally, generated inside a Stocks and Shares ISA. To generate £888 a month, or £10,656 a year, I'd need to think carefully about what kind of payout I'm aiming for. Many people use the so-called 4% rule, which assumes investors draws 4% a year from a pot without running it down too fast. That would mean needing a hefty £266,400 to hit my income target. That's quite a chunk of change. But I think it's possible to bring that number down a fair bit, depending on the stocks I pick and the yields they offer. One of my favourite second income stocks is FTSE 100 wealth manager M&G (LSE: MNG). A year ago, it was yielding close to 10%. That's since dipped to around 7.9% as the shares have enjoyed a strong run. They've climbed 25% over 12 months, and 60% over five years. Not bad for a stock many wrote off as purely an income play. Possibly including me. M&G isn't without risk. Markets remain shaky, and the long shift to passive investing is still a threat to its active management model. With interest rates staying higher for longer, income seekers may find cash and bonds more tempting than equity income stocks, where capital is at risk. The dividend is set for modest growth, with the board targeting 2% annual increases. But there's still potential. On 30 May, M&G revealed that Japan's Dai-ichi Life will be taking a 15% stake, bringing an estimated $6bn of new investment into its funds over the next five years. That has given sentiment a lift. I suspect share price growth may slow after its strong run, but I think M&G is still worth considering with a long-term view. Even so, I wouldn't pile everything into a single income stock, no matter how juicy the yield. Instead, I'd spread my money around and aim for a more realistic average yield of 5.5%. With a 5.5% yield, I'd need around £193,745 in my ISA to generate £10,656 of annual income and hit that £888 monthly goal. That assumes I live off the dividends, and leave the capital untouched to keep growing over time. That's almost £195,000 which sounds like a lot, and it is. But over a 40-year working life, I think it's achievable. For example, investing just £75 a month at an average growth rate of 7% – roughly in line with the long-term FTSE 100 average – could do the trick. Naturally, there are risks. Stock markets can go down as well as up. Inflation will nibble away at the buying power of that £888. So I'd encourage anyone with long-term ambitions to save more if they can. But this shows that with patience, consistency and a little know-how, building a decent ISA income pot is far from impossible. I'd say income investors might consider buying high-yield stocks where the fundamentals still stack up, while diversifying to help smooth out the ride. The post See how much an investor needs in an ISA to fund an £888 monthly passive income appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Harvey Jones has positions in M&g Plc. The Motley Fool UK has recommended M&g Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025
