Understanding UK inheritance tax and estate planning for non-residents: Benjamin Franklin famously said that nothing in life is certain except death and taxes. This article provides an overview of how UK inheritance tax applies to non-residents and to individuals moving to or leaving the UK, together with the importance of proper estate planning.
Published 31st March 2026
Understanding UK inheritance tax and estate planning for non-resident investors: Benjamin Franklin famously said that nothing in life is certain except death and taxes. This article provides an overview of how UK inheritance tax applies to non-residents and to individuals moving to or leaving the UK, together with the importance of proper estate planning.
Understanding UK inheritance tax and estate planning
Benjamin Franklin famously said “In this world nothing can be said to be certain, except death and taxes“. This article provides an overview of how UK inheritance tax applies to non-residents and to individuals moving to or leaving the UK, together with the importance of proper estate planning.
Understanding UK inheritance tax and estate planning for non-resident investors: Benjamin Franklin famously said that nothing in life is certain except death and taxes. This article provides an overview of how UK inheritance tax applies to non-residents and to individuals moving to or leaving the UK, together with the importance of proper estate planning.
UK inheritance tax and residency status
UK inheritance tax (IHT) depends heavily on an individual’s residency history.
A person is generally treated as a long-term UK resident for inheritance tax purposes if they have been UK tax resident for at least ten of the previous twenty tax years.
During the first nine years of UK residency, inheritance tax typically applies only to UK-based assets. From the tenth year of residency onwards, worldwide assets may fall within the scope of UK inheritance tax.
Individuals who leave the UK should also be aware of the inheritance tax “tail”. This means a person may remain subject to UK inheritance tax on their worldwide estate for up to ten years after becoming non-resident. Where residency lasted between ten and nineteen years, this exposure period may be shorter.
Inheritance tax rates and allowances
Inheritance tax rates have remained unchanged for many years.
- The first £325,000 of an estate is taxed at 0%. This is known as the £Nil rate band.
- Assets above £325,000 are generally taxed at 40%.
- Any unused £Nil rate band may usually be transferred to a surviving spouse or civil partner.
Transfers between spouses are normally exempt from inheritance tax. However, additional rules can apply where one spouse is long-term UK resident and the other is not.
Anyone planning to move to the UK should consider inheritance tax alongside income tax and capital gains tax planning, as early advice can significantly reduce future liabilities.
Inheritance tax is complex and advice should always be tailored to personal and family circumstances. This article provides general information only and should not be relied upon as specific advice.
The importance of making a Will
Making a valid Will is an essential part of estate planning, particularly for non-residents or internationally mobile families.
When a person dies, their estate is administered by Personal Representatives. They settle outstanding debts and distribute the remaining assets according to the instructions set out in the Will.
If no Will exists, the estate is distributed under the intestacy rules set out in English law. These rules may produce outcomes that differ significantly from a person’s wishes. The hierarchy of inheritance where there is no will is laid down in English Law.
What happens if there is no Will
Common situations under intestacy include:
- Married with children: the spouse may receive a fixed sum and part of the estate, with the remainder divided between children or other relatives.
- Unmarried partners: UK law does not recognise unmarried partners, meaning a long-term partner may inherit nothing.
- No immediate family: where no qualifying relatives exist, the estate may pass to the Crown.
- Cultural or religious wishes: personal preferences are not taken into account under statutory inheritance rules.
Creating a Will helps ensure assets are distributed according to your wishes and reduces the risk of disputes, unintended beneficiaries, or financial hardship for family members.
Seeking professional advice
If you require advice on preparing a Will, you should consult a qualified solicitor. Estate planning and inheritance tax planning should always consider your personal circumstances and international connections, and this article should not be relied upon as a substitute for professional advice.
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Understanding UK inheritance tax and estate planning for non-resident investors: Benjamin Franklin famously said that nothing in life is certain except death and taxes. This article provides an overview of how UK inheritance tax applies to non-residents and to individuals moving to or leaving the UK, together with the importance of proper estate planning.
The information contained in this article is believed to be correct at the time of publication. The content of this article is intended to be a brief summary of the principal points of the legislation or proposed legislation only, and it is provided for general guidance only. It may not take into account subsequent changes in the law and of necessity it omits much detail. Taxation is a complicated subject and is subject to change. You should only rely on advice prepared specifically for you. Neither the writer nor Landlords Tax Services Ltd can be held liable for any loss arising from any act or omission by you as a result of your understanding of this article. If the subject matter is of interest you should contact us to see if there is a relevant update, and to take professional advice which takes into account your circumstances.