IHT and Moving Abroad
amelia1983
Member
Good afternoon,
I would really appreciate your thoughts on a client case we have.
Husband and Wife have a very large estate worth c£20-30M. Wife was originally born in Australia but has been in the UK since 2000 so deemed domicile.
If, in the future, they were to move to Australia and sever all ties with the UK (no bank accounts or property). How long would they need to be out of the country before their assets wouldn't be caught in the UK IHT regime? As I understand it, Australia doesn’t have any IHT. If the husband died, it is likely the wife would move back to Australia.
I look forward to hearing from you.
Comments
Domicile was replaced as a concept on 6th April 2025.
The new test on whether somebody's estate is subject to UK IHT is residency-based. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47020
Sounds like your clients would need 10 consecutive years of non-UK residence.
Definitely one to seek specialist advice on, and probably worth considering a 10-year life cover policy too!
Hi,
As noted above, since 6/4/25 the concept of “domicile” has been replaced by a “long-term resident” test for UK IHT purposes. In short, an individual will now have their worldwide assets within scope of UK IHT if they have been UK resident for at least 10 of the previous 20 tax years. Here's a quick summary:
• UK-sited assets will always remain within the scope of IHT for all individuals irrespective of domicile or residence status. So if they are planning to emigrate permanently, it's worthwhile considering moving all assets offshore.
• Non-UK assets - If the individual was UK tax resident for 10 out of the past 20 years, their non-UK assets may remain within the scope of IHT for up to 10 years after leaving the UK.
• ‘Four Year ‘FIG’ Regime (Foreign income and gains) – This may not apply to your client but ‘Brits abroad’ who return to the UK after 10 consecutive years of non-residence, can claim relief from UK tax for any non-UK income and gains arising in the first 4 years of their UK residence.