From 6 April 2025, the concept of “domicile” will be scrapped for inheritance tax (IHT). Instead, liability will be based purely on residency. If you’ve lived outside the UK for more than ten years, your estate will no longer automatically fall under UK inheritance tax rules. For many expats, this offers long-awaited relief. But if you return to the UK—whether for retirement, family, or lifestyle reasons—you’ll once again be a UK tax resident and your worldwide estate could fall back into the IHT net.
Watch our video to learn about the key changes, the 10-year residency rule explained in plain English, and real client scenarios showing how families are rethinking their estate planning under the new system.
What happens to the IHT rules from 6 April 2025?
Every UK tax year ends on 5 April and starts on 6 April. From 6 April 2025, inheritance tax rules will be based on residency, not domicile. The 6th of April 2025 should be a celebration day for any of our clients or prospective clients who have already been long-term residents outside the UK. If you have been outside the UK for more than 10 years, your worldwide estate will no longer fall under UK inheritance tax.
Why Is This a Big Deal for Non-UK Residents?
For long-term non-UK residents, this reform is nothing short of a game-changer. Until now, the concept of domicile has kept many expats tied to the UK inheritance tax system, even after living abroad for decades. Families who thought they had fully left the UK tax net were often surprised to learn their estate could still be taxed simply because of their domicile status.
From 6 April 2025, that changes. If you have lived outside the UK for 10 years or more, your worldwide estate will no longer automatically be caught by UK inheritance tax. This gives expats far greater clarity and, for many, a sense of relief that their estate planning will finally reflect where they actually live.
For example, A couple living in Dubai for more than 10 years will, from April 2025, no longer be deemed UK domiciled for IHT. Their estate will not be dragged back into the UK tax net, unless they return to the UK.
But the reverse is just as important to understand if they later move back to the UK (for retirement, for their children’s schooling, or to be closer to family), they will become UK tax residents again. Their estate would then fall back into the scope of IHT.
This is why the reform matters so much. It creates a clear line: 10 years abroad removes you from UK IHT; stepping back into the UK makes you liable again. For expats weighing up whether to stay abroad or return home, this will become one of the most important factors in long-term estate planning
Why This Reform Requires Careful Advice?
The abolition of domicile status is not just a technical detail, it fundamentally reshapes how inheritance tax applies to anyone with UK connections. For long-term expats who have lived abroad for more than 10 years, the new residency-based system could provide a once-in-a-lifetime opportunity to protect their estate from UK IHT. But opportunities also come with risks.
The critical decision isn’t simply “Do I want to pay less tax?” It’s about weighing tax planning against the bigger picture of your life. Many clients tell us they’d like to move back to the UK one day — to be close to family, for healthcare, or simply because they miss home. Others are committed to building their lives abroad. Either way, these lifestyle choices carry major financial consequences under the new rules.
That’s why independent, regulated advice is essential. Good advice does three things:
- Puts lifestyle first – Helping you decide where you actually want to live and retire, without letting tax alone dictate your life decisions.
- Models the numbers – Using cashflow planning to show what your estate, pensions, and investments would look like under different scenarios (staying abroad, moving back, or relocating elsewhere).
- Builds safeguards – Where tax exposure is unavoidable, strategies such as life insurance, gifting, and structuring can reduce the burden on your beneficiaries.
In short: this reform isn’t about chasing tax advantages. It’s about aligning your long-term financial strategy with your personal goals, so you can enjoy your life and protect your family’s future. Independent advice makes sure you get that balance right.
What IHT Planning Options Are Available?
If you do decide to return to the UK after April 2025, there are still ways to manage your inheritance tax exposure:
- Whole of life insurance policies: Provide liquidity to cover future IHT liabilities for your heirs.
- Gifting strategies: Gradually pass wealth to children or beneficiaries during your lifetime.
- Trusts & structuring: Explore compliant structures in line with UK and international tax rules.
- Spending more in retirement: Reducing the value of your taxable estate by enjoying more of your wealth while alive.
At Cameron James, we focus on the financial planning side, cashflow modelling, pension structuring, and ensuring your retirement plan works under the new residency regime. Where specialist tax advice is needed, we work with third-party tax experts to give you the full picture
Final Thoughts — How Will the 2025 IHT Reform Shape the Future for UK Non-Residents?
This reform represents a once-in-a-generation shift. From April 2025, long-term non-residents will finally be free of the outdated domicile rules that have trapped so many families in the UK inheritance tax system. For some, this is a reason to stay abroad permanently. For others, it’s a reminder that moving back to the UK has consequences that need careful planning.
Either way, the key is the same: take advice, understand the trade-offs, and make decisions based on your whole life not just book a free, no-obligation consultation with one of our advisers and understand exactly how the 2025 reforms affect you and your family. As always, take care with your UK pension assets.
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Disclaimer:
Cameron James is not authorised to provide tax advice. For formal tax planning, we will refer you to a qualified third-party tax adviser. This blog is for information purposes only and should not be considered financial or legal advice.