Inheritance tax for UK non-residents: A guide

This guide is for informational purposes only and does not constitute tax advice. Get professional tax advice and guidance from your lawyer or tax advisor when dealing with inheritance tax.

In this guide, we’ll look at how inheritance tax works for UK non-residents. This includes an overview of the UK’s IHT system, whether non-residents have to pay inheritance tax in the UK and information on allowances and reliefs you may be able to claim.

We’ll also introduce a cost-effective way to send large amounts of money between countries using the Wise Account. This can be extremely useful if you have inheritance tax to pay, or want to send money from an inheritance to the country of your residence.

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How inheritance tax works in the UK - an overview

In the UK, inheritance tax (IHT) is charged on the estate of a person who has died. The tax owed is paid directly out of the estate, before it is divided up and heirs receive their inheritance. This is unlike in some other countries, where beneficiaries need to pay inheritance tax themselves.

IHT is paid to HM Revenue and Customs (HMRC) by the executor of the person’s estate.

It’s only payable if the value of the estate is over £325,000, and isn’t paid when you leave assets or money to your spouse or civil partner (or a charity).¹

Key UK inheritance tax facts to remember:

Here are some of the most important facts about UK IHT to bear in mind:¹

• It’s not payable on estates with a value of under £325,000
• Where it is payable, it’s only due on the portion of the estate which exceeds the £325,000 threshold
• Inheritance tax isn’t due on assets left to a spouse, civil partner or charity
• If you leave your home to your children or grandchildren, your tax-free threshold increases to £500,000
• The standard inheritance tax rate in the UK is 40%.

Do non-residents pay UK inheritance tax?

Yes, non-residents pay UK inheritance but only on UK-based assets.² This includes assets like real estate property and bank accounts, but it doesn’t include certain ‘excluded’ assets.

These are:²

• Foreign currency accounts, including those held with the Post Office as well as banks and other providers
• Overseas pensions
• Overseas properties
• Holdings in authorised unit trusts and open-ended investment companies.

However, there are strict rules on who counts as a ‘non-resident’, and if you don’t meet the eligibility requirements then your worldwide assets could be subject to inheritance tax. We’ll look at this in more detail next.

Who counts as a non-resident for tax purposes?

The UK’s HM Revenue and Customs (HMRC) will treat you as being based abroad if you have lived in the UK for fewer than 10 years in the last 20 years.²

Otherwise, you’ll be classed as still being ‘domiciled’ in the UK, which means it's considered to be your permanent home for tax purposes.

If this is the case, then your assets outside the UK could also be subject to inheritance tax when you die - even if you've been living abroad for some years.³ This includes money in overseas bank accounts, holiday homes in other countries, and your permanent family home in whatever country you were living in.

Domicile vs. residency - what’s the difference?

One of the most important factors which determines liability for inheritance tax in the UK is whether you are considered to be ‘domiciled’ in the UK. This is often confused with residency, but it’s not the same thing.

Residency in a country for tax purposes is determined by how many days in a tax year you spend in the country. For example, if you spend more than 183 days in Spain within the tax year, you can be considered a tax resident for that year - and may have to pay Spanish taxes.

Domicile refers to the country you consider - or the authorities consider - to be your permanent home.

New rules introduced by the UK Government in April 2025 brought in a residence-based system for determining inheritance tax obligations. This replaces ‘domicile’ with ‘long-term resident’, where you’ll be considered to be a ‘long-term resident’ in the UK if you’ve lived there for more than 10 years in the last 20 years.³

What is the inheritance tax tail?

If you leave the UK, you and your worldwide assets will be considered to be within the scope of UK inheritance tax for up to 10 years after you leave.

This period is known as the ‘inheritance tax tail’ and its length varies depending on how long you lived in the UK. The longer this period, the more time you’ll be subject to UK inheritance tax laws.

For example, if you lived in the UK for 13 years or less, you’ll only be within the scope of UK inheritance tax for 3 years. But for someone who was a UK resident for 20 years, this increases to 10 years.³

UK IHT allowances and reliefs for non-residents

If any of your assets fall under UK inheritance tax laws, you can still benefit from many of the same allowances and reliefs as UK residents.

This includes the tax-free IHT allowance of £325,000, and the extra £175,000 if you leave your UK home to your children or grandchildren.¹

Assets such as overseas pensions, property and certain investments are also exempt, but only if you’re not classed as a ‘long-term resident’ or ‘domiciled’ individual in the UK for tax purposes.

How to get advice on inheritance tax for UK assets

Tax can be really complicated, especially if you live between countries or have recently relocated abroad. It’s crucial to get the right professional advice, to understand your tax obligations and help you structure your affairs to avoid a large unexpected tax bill.

The best place to seek help is an FCA (Financial Conduct Authority) accredited financial advisor, preferably one with specialist knowledge related to expat tax affairs. You may also need to seek advice in relation to your tax obligations in the new country you’re living in.

One of the most important things to get expert advice on is Double Taxation Agreements (DTAs), which can help you avoid paying tax on the same assets twice - once in the UK and again in your new country of residence.

Save money on paying global tax bills with Wise

If you have a tax bill to pay or you need to transfer inherited funds between countries, Wise offers a cost-effective way to do it.

Open a Wise account and you can make fast, secure transfers to 140+ countries, for low, transparent fees and mid-market exchange rates. There’s even a dedicated service for sending large amounts, ideal if you’ve inherited some money from a relative in another country.

You can hold 40+ currencies at once with your Wise account, and convert it to GBP or another currency whenever you want. Thanks to the low fees and margin-free exchange rates, you could save money compared to using a bank.

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sources used:

Sources last checked 05-Nov-2025