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The UK’s 2024 Autumn Budget has introduced some of the most radical tax reforms in decades. Among them, the shift from a domicile-based inheritance tax (IHT) system to a residence-based system is a game-changer. This transition aligns with broader changes affecting non-UK domiciled individuals, including the abolition of the remittance basis and the new Foreign Income and Gains (FIG) regime.
For individuals with international assets, high-net-worth individuals, and expatriates, this shift presents new risks and planning challenges. Here’s what you need to know:
Key Changes Effective from 6 April 2025
Domicile is No Longer Relevant for IHT
Old System: Inheritance Tax (IHT) was based on domicile. UK-domiciled individuals were taxed on their worldwide estate, while non-domiciled individuals were taxed only on UK assets.
New System: IHT is now based on UK tax residence. If you have been a UK resident for 10 out of the last 20 years, you will be subject to IHT on your worldwide assets.
The “IHT Tail” – Exit Tax for Departing Residents
If you leave the UK after being a long-term resident, you could still be liable for IHT for up to 10 years post-departure:
➤ 3 years if UK resident for 10-13 years.
➤ Up to 10 years if resident for 14-19 years.
➤ 10 years full liability if resident for 20+ years.
Transitional Relief for Non-UK Domiciled Individuals
Individuals who leave before April 2025 and were not deemed domiciled by 30 October 2024 may avoid the new rules entirely.
Those deemed domiciled on 6 April 2025 will still have a 3-year IHT tail, regardless of prior residency history.
Foreign Trusts Lose Protections
Currently, offshore trusts allow non-domiciled individuals to shield foreign assets from IHT.
From April 2025, foreign trusts will no longer provide this protection once an individual meets the long-term residency threshold.
Foreign Income and Gains (FIG) Regime – A New 4-Year Relief
To encourage international talent, the UK is introducing a 4-year tax relief for new arrivals:
➤ Foreign income and gains will not be taxed in the first 4 years of UK residence, provided the individual was not a UK tax resident in the last 10 years.
➤ After the 4-year period, full UK tax applies.
Temporary Repatriation Facility (TRF) – 12% Flat Tax
Individuals who have previously claimed remittance basis can remit pre-6 April 2025 foreign income and gains to the UK at a reduced tax rate of 12% for two years only (2025-26 & 2026-27).
Double Taxation Agreements (DTAs) & Greek Nationals
In the case of Greece, the UK-Greece Tax Treaty (1953) states clearly:
➤ Greek property is taxed in Greece.
➤ UK property is taxed in the UK.
➤ Movable assets (stocks, bank accounts, etc.) may be subject to both UK and Greek tax, with relief available.
INTERESTING: The UK’s residency-based IHT approach may conflict with the treaty, requiring clarification on how tax credits will be applied. This is a clear sign that governments need to revise the treaty, which has been untouched since 1953.
Example: How This Affects You
Case Study: Nikos, a Greek National in London
Nikos has lived in London for 12 years and owns a flat in Mayfair (£1.2m) and a villa in Mykonos (£1.5m).
Old Rules: Only his Mayfair flat would be subject to UK IHT.
New Rules (from April 6, 2025): Since he has been UK resident for 10+ years, his Mykonos villa will now be taxable under UK IHT as well.
Greek Tax Law: Greece will still tax his Greek assets, meaning he might face double taxation unless treaty relief applies.
If he leaves the UK in 2026, he may still be taxed under UK IHT for 3-10 more years.
What You Should Do Now
If you are an international professional, entrepreneur, or high-net-worth individual living in the UK, now is the time to review your estate and tax planning:
Check your tax residence history – Have you been in the UK 10+ years? If so, you may be impacted.
Consider leaving before April 6, 2025 – Exiting before the deadline may avoid new tax burdens.
Review international assets – Property, trusts, and overseas bank accounts could now fall under UK IHT.
Explore the 4-Year FIG Regime – If you’re a newcomer to the UK, see if you qualify for temporary tax relief.
Reassess offshore trust structures – These may no longer protect against UK taxation after April 2025.
Seek expert tax advice – Every case is different, and the UK-Greece tax treaty interpretation could change.
Conclusion
The UK’s new residence-based inheritance tax system represents a major shift, removing the long-standing non-domiciled advantages. If you have global assets, this could increase your tax burden significantly.
Key Deadline: April 6, 2025 – This is the last opportunity to restructure your affairs before the new rules take effect.
Next Steps: If you are affected, speak to a tax professional now to protect your wealth and plan strategically before it’s too late.
© 2025 UPECO LTD
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ATTENTION!
This article intends to give only a general informative picture and should not, in any case, be taken as a rule. It is strongly recommended to seek a full and professional guidance specifically for your circumstances before making any decisions.
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