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Inheritance Tax

Inheritance Tax on Foreign Assets and Overseas Property

Whether UK inheritance tax reaches overseas property and foreign assets now turns mainly on how long the person lived in the UK, not where the assets sit.

9 min read · Written by the Fairchild Oldfield team · Last reviewed: July 2026

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Broadly, someone tax resident in the UK for at least 10 of the previous 20 tax years is a long-term UK resident, and their worldwide assets, including overseas property, can then fall within UK inheritance tax.
Source: gov.uk, as at July 2026, subject to change.

UK inheritance tax can apply to foreign assets and overseas property, but only where the person who died counts as a long-term UK resident. For deaths on or after 6 April 2025, the old domicile test was replaced by a residence-based test, so how long someone lived in the UK now largely decides whether their worldwide estate is in scope (gov.uk, long-term UK resident rules, as at July 2026, subject to change).

This guide explains when a Spanish holiday home, a French bank account or overseas investments are caught, what changed in April 2025, how relief works where two countries tax the same asset, and how foreign assets are reported. It forms part of our wider Inheritance Tax Explained guide. Figures are current as at July 2026 and are subject to change.

Does UK inheritance tax apply to foreign assets?

It can. Where the person who died was a long-term UK resident, UK inheritance tax is charged on their assets worldwide, including overseas property and foreign accounts, at the standard rate of 40% on value above the available tax-free bands (gov.uk, as at July 2026, subject to change). Where they were not, only their UK assets are normally in scope (gov.uk, as at July 2026, subject to change).

Position of the person who diedWhat UK IHT can reach
Long-term UK residentWorldwide assets, including overseas property
Not a long-term UK residentGenerally UK assets only
Any estateSame £325,000 nil-rate band and 40% rate apply

Sources: gov.uk, long-term UK resident and gov.uk, dying outside the UK, as at July 2026, subject to change. The £325,000 nil-rate band and 40% rate are set out at gov.uk/inheritance-tax and are frozen to the end of the 2030-31 tax year (5 April 2031) (gov.uk).

What changed in 2025

The long-term UK resident test

From 6 April 2025 the domicile and deemed-domicile rules were replaced by a residence-based test. Broadly, a person is a long-term UK resident if they were tax resident in the UK for at least 10 of the previous 20 tax years, and their non-UK assets can then fall within inheritance tax on a transfer or on death (gov.uk, long-term UK resident rules, as at July 2026, subject to change).

The status does not switch off the moment someone leaves. Depending on how long they were resident, the rules can continue to apply for a number of tax years after departure, so overseas assets may stay in scope for a period after a move abroad (gov.uk, as at July 2026, subject to change). Because the transitional rules are detailed, this is an area many people talk through with a qualified professional.

For how the wider system fits together, see our guide to domicile and inheritance tax.

The residence-based test

10 years

Broadly, 10 or more years of UK tax residence within the previous 20 tax years can make someone a long-term UK resident, bringing overseas property and foreign assets within UK inheritance tax (gov.uk, as at July 2026, subject to change).

What if the person lived mainly abroad?

Where someone was not a long-term UK resident, UK inheritance tax generally reaches only their UK assets, such as UK property or a UK bank account, and not their overseas estate. HMRC treats a person as based abroad for this purpose where they lived in the UK for less than 10 years in the last 20 (gov.uk, when someone living outside the UK dies, as at July 2026, subject to change). Some holdings, described as excluded assets, sit outside the charge regardless.

Excluded assets can include foreign currency accounts held with a bank or the Post Office and certain overseas pensions, which are treated as outside UK inheritance tax in the way the guidance describes (gov.uk, as at July 2026, subject to change). Whether a particular holding qualifies depends on its exact nature, so it is one point people often check carefully rather than assume.

  • UK assets stay in scope. UK property and UK accounts can be taxed even where someone lived abroad.
  • Overseas assets may be outside. Where the person was not a long-term UK resident, their foreign estate is generally not caught.
  • Excluded assets. Some foreign currency accounts and overseas pensions can fall outside the charge, subject to the detail.

Being taxed twice: double taxation relief

Overseas property is often taxed in the country where it sits, which can mean two countries charging tax on the same asset. UK inheritance tax offers double taxation relief so that, broadly, credit may be given for foreign tax paid on the same assets, either under a double taxation convention or, where none applies, under unilateral relief (gov.uk, Inheritance Tax double taxation relief, as at July 2026, subject to change).

The UK has inheritance tax or estate tax conventions with a number of countries, and the relief available depends on the specific treaty or, failing that, the unilateral rules (gov.uk, as at July 2026, subject to change). Because the interaction between two systems can be intricate, it can be worth discussing with a solicitor, a STEP practitioner or an accountant with cross-border experience.

A worked example (illustration only). Someone who had lived in the UK for most of their adult life dies owning a UK home worth £500,000 and a Spanish apartment worth £250,000. As a long-term UK resident, their worldwide estate is in scope, so the Spanish apartment is included alongside the UK home (gov.uk, as at July 2026, subject to change). If Spain also charges tax on the apartment, double taxation relief may give credit for the Spanish tax against the UK tax on that same asset (gov.uk, as at July 2026, subject to change). Change the residence history, the countries or the values and the outcome changes, so this is general information rather than a calculation for any real estate.

Working out the position

How foreign assets fit the process

I

Check the status

Establish whether the person was a long-term UK resident, broadly 10 of the last 20 tax years. Source: gov.uk, July 2026, subject to change.

II

List the assets

Identify UK and overseas assets, and note any excluded assets that fall outside the charge.

III

Report the foreign assets

Overseas assets are set out on form IHT417 alongside the main estate return. Source: gov.uk, July 2026, subject to change.

IV

Claim any relief

Where foreign tax was paid on the same asset, double taxation relief may reduce the UK tax. Source: gov.uk, July 2026, subject to change.

Foreign assets and inheritance tax in Scotland and Northern Ireland

Inheritance tax is a UK-wide tax, so the long-term resident rules, the £325,000 nil-rate band and the 40% rate apply the same way across Scotland, England, Wales and Northern Ireland (gov.uk, as at July 2026, subject to change). What differs is the surrounding succession law. Scotland has its own rules, including legal rights that can give a spouse and children a fixed share, and it uses confirmation rather than a grant of probate. Overseas property may also be governed by the succession law of the country where it sits, which can differ sharply from UK law. Where an estate spans more than one country, it can be worth taking advice in each. For the wider picture, see our estate planning guide.

Frequently asked questions

Do you pay UK inheritance tax on overseas property?

You can, where the person who died was a long-term UK resident, because their worldwide estate is then in scope and overseas property is included (gov.uk, as at July 2026, subject to change). Where they were not a long-term UK resident, UK inheritance tax generally reaches only UK assets. The country where the property sits may charge its own tax as well.

What is a long-term UK resident for inheritance tax?

Broadly, a person is a long-term UK resident where they were UK tax resident for at least 10 of the previous 20 tax years, a test that replaced the old domicile rules for deaths on or after 6 April 2025 (gov.uk, as at July 2026, subject to change). The status can also continue for a period after someone leaves the UK, depending on how long they were resident.

Is a foreign bank account subject to UK inheritance tax?

It depends on the person's residence position and the type of account. Where they were a long-term UK resident, foreign accounts generally form part of the worldwide estate, though certain foreign currency accounts held with a bank or the Post Office can be excluded assets that sit outside the charge (gov.uk, as at July 2026, subject to change). Whether a specific account qualifies turns on the detail.

Can the same asset be taxed by two countries?

It can, because many countries tax assets located within their borders. UK inheritance tax offers double taxation relief so that credit may be given for foreign tax paid on the same asset, under a treaty or under unilateral relief where no treaty applies (gov.uk, as at July 2026, subject to change). Because two systems interact, many people take cross-border advice.

How are foreign assets reported to HMRC?

Overseas assets in an estate are generally listed on form IHT417, the foreign assets form, which is completed alongside the main inheritance tax return (gov.uk, IHT417 foreign assets, as at July 2026, subject to change). The valuations and any foreign tax paid feed into the calculation. Because overseas valuations and reliefs can be involved, it can be worth taking professional help with the return.

Does moving abroad remove overseas assets from UK inheritance tax?

Not immediately. Where someone was a long-term UK resident, the rules can continue to apply for a number of tax years after they leave, so their overseas assets may stay in scope for a period after a move abroad (gov.uk, as at July 2026, subject to change). The length depends on how long they were resident, so this is an area many people plan around with advice.

About Fairchild Oldfield

The Fairchild Oldfield team brings together estate planning, tax, independent financial advice and client care, working with families across England and Wales.

Fairchild Oldfield are estate planning specialists and will writers, not a firm of solicitors. This article is general information based on practical experience, not legal, tax or financial advice.

Important: This article is general information only and is not legal, tax or financial advice. Reading it does not create a professional relationship. It is based on the law of England and Wales, and other UK jurisdictions may differ. Cross-border estates are also affected by the law of the countries where assets sit. Figures and rules are current as at July 2026 and are subject to change. Before acting, many people choose to seek advice from a suitably qualified professional, such as a solicitor, a STEP practitioner, an accountant, or an FCA-authorised financial adviser, who can consider your individual circumstances.

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