The non-dom inheritance tax changes took effect on 6 April 2025, when the UK replaced its domicile-based system with a residence-based one. Whether your overseas assets fall within UK inheritance tax now depends on how long you have been resident here, not on where you are domiciled.
Under the old rules, a person's domicile decided whether inheritance tax (IHT) reached their non-UK (worldwide) assets. From 6 April 2025 that link to domicile was removed for IHT, and a "long-term resident" test took its place (gov.uk, Inheritance Tax if you are a long-term UK resident, as at August 2026, subject to change). This guide explains the new test, what happens when someone leaves the UK, how trusts are treated, and which parts of inheritance tax were not affected. It covers the law of England and Wales; inheritance tax is a UK-wide tax, so the same rules apply in Scotland and Northern Ireland, although succession law itself differs. Figures are current as at August 2026 and are subject to change.
What changed on 6 April 2025
The reform, announced at the Autumn Budget 2024, ended the concept of domicile for inheritance tax purposes and introduced residence as the deciding factor (gov.uk, Changes to the taxation of non-UK domiciled individuals, as at August 2026, subject to change). In short:
- Before 6 April 2025. Domicile determined whether worldwide assets were caught. UK-situated assets were always within IHT; non-UK assets were within IHT only if the person was UK-domiciled or deemed domiciled.
- From 6 April 2025. A person who is a long-term UK resident is within IHT on their worldwide assets. A person who is not a long-term resident is generally within IHT only on their UK-situated assets.
UK property, such as a home or land in England and Wales, has always been within the scope of inheritance tax regardless of residence or domicile, and that has not changed.
The long-term resident test
A person is a long-term UK resident once they have been UK tax resident for at least 10 of the previous 20 tax years, tested at the point of a chargeable event such as death or a transfer into trust (gov.uk, as at August 2026, subject to change). Reaching that point brings non-UK assets within inheritance tax.
| Status | What falls within UK inheritance tax |
|---|---|
| Not a long-term resident (fewer than 10 of the last 20 tax years) | UK-situated assets only |
| Long-term resident (10 or more of the last 20 tax years) | Worldwide assets |
Source: gov.uk/guidance/inheritance-tax-if-youre-a-long-term-uk-resident, as at August 2026, subject to change.
Residence for each tax year is worked out under the Statutory Residence Test (gov.uk, Statutory Residence Test, as at August 2026, subject to change). New arrivals therefore have a run of years before their overseas assets are caught, and the test looks back across a rolling 20-year window rather than at a single moment.
What happens on leaving the UK
Becoming a long-term resident is not permanent. Someone who leaves the UK can keep long-term resident status, and so remain within IHT on worldwide assets, for a period after departure. This "tail" runs for between 3 and 10 tax years, depending on how long they were resident (gov.uk, as at August 2026, subject to change).
| Tax years UK resident (of the last 20) | Years worldwide assets stay in scope after leaving |
|---|---|
| 10 to 13 | 3 years |
| 14 | 4 years |
| 15 | 5 years |
| 16 to 19 | 6 to 9 years (one extra year each) |
| 20 | 10 years |
Source: gov.uk, as at August 2026, subject to change. The tail increases by one tax year for each year of residence between 14 and 20.
How trusts are affected
Trusts were reformed alongside the personal rules. Whether non-UK assets held in a trust are "excluded property", and so outside inheritance tax, now depends on whether the settlor is a long-term resident at the time of the chargeable event, rather than on the settlor's domicile when the trust was created (gov.uk, as at August 2026, subject to change). Existing excluded property trusts are within the new framework, so their treatment can change as the settlor's residence status changes. Trust taxation is detailed, and the interaction with the reform is one area where advice tends to be worthwhile.
What did not change
The reform changed the geographic reach of inheritance tax, not its core allowances or rates. These remain as follows.
| Feature | Level |
|---|---|
| Nil-rate band | £325,000 |
| Residence nil-rate band | Up to £175,000 |
| Standard rate | 40% |
| Reduced rate (10%+ of net estate to charity) | 36% |
| Taper threshold for the residence band | £2,000,000 |
Source: gov.uk/inheritance-tax, as at August 2026, subject to change. The residence nil-rate band is reduced by £1 for every £2 by which an estate exceeds £2,000,000. The nil-rate band, residence nil-rate band and taper threshold are frozen until 5 April 2031 (the end of the 2030-31 tax year), a freeze extended by a further year at Budget 2025 (gov.uk, as at August 2026, subject to change).
Transfers between spouses and civil partners remain generally exempt, and unused nil-rate bands can still transfer to a surviving spouse or civil partner, which is how a couple leaving a home to direct descendants can reach up to £1,000,000 of combined tax-free allowance (gov.uk, as at August 2026, subject to change). The 7-year rule for lifetime gifts is also unchanged.
- Domicile no longer decides inheritance tax on overseas assets; residence does, from 6 April 2025 (gov.uk).
- Long-term resident: UK resident for 10 or more of the previous 20 tax years (gov.uk).
- On leaving the UK, worldwide assets stay in scope for 3 to 10 years (gov.uk).
- Nil-rate band £325,000; standard rate 40% (gov.uk).
A related change: pensions from 2027
Separately from the non-dom reform, the government has announced that from 6 April 2027 most unused pension funds and death benefits will be brought within the value of a person's estate for inheritance tax (gov.uk, Inheritance Tax on pensions, announced Autumn Budget 2024, as at August 2026, subject to change). This is a future change rather than one already in force, and it applies regardless of residence status. Anyone reviewing their position because of the non-dom rules may find it relevant to consider this pension change at the same time. Our guide to how inheritance tax works sets out the wider framework.
Where this fits in a wider plan
The residence-based rules change who is exposed to inheritance tax on overseas assets, but the tools for addressing an eventual liability, such as allowances, exemptions, spousal transfers and lifetime gifts, work in the same way as before. For readers thinking about the bigger picture, our estate planning guide shows how a will, trusts and tax planning fit together, and writing a valid will remains the foundation of most plans. Because residence, trust status and international assets can interact in complex ways, this is an area where general information has its limits, and many people take advice from a suitably qualified professional. You can also arrange a consultation to talk through your circumstances.
Frequently asked questions
What are the non-dom inheritance tax changes?
From 6 April 2025, the UK replaced the domicile-based test for inheritance tax with a residence-based one. Whether a person's overseas assets are within inheritance tax now depends on whether they are a long-term UK resident, rather than on their domicile (gov.uk, as at August 2026, subject to change).
When did the non-dom inheritance tax changes take effect?
They took effect on 6 April 2025, the start of the 2025-26 tax year, having been announced at the Autumn Budget 2024 (gov.uk, as at August 2026, subject to change).
What is a long-term UK resident for inheritance tax?
A long-term UK resident is someone who has been UK tax resident for at least 10 of the previous 20 tax years, measured at the time of a chargeable event such as death. Once a person meets this test, their worldwide assets fall within inheritance tax (gov.uk, as at August 2026, subject to change).
Does domicile still matter for inheritance tax?
Domicile no longer determines whether overseas assets are within inheritance tax; residence does that from 6 April 2025. Domicile can still be relevant for some other tax purposes and for succession law, but not for the geographic scope of inheritance tax (gov.uk, as at August 2026, subject to change).
How long do worldwide assets stay in scope after leaving the UK?
Between 3 and 10 tax years, depending on how long the person was resident. Someone resident for 10 to 13 of the last 20 tax years keeps long-term resident status for 3 years after leaving, rising to a maximum of 10 years for those resident for all 20 (gov.uk, as at August 2026, subject to change).
Are trusts affected by the non-dom inheritance tax changes?
Yes. Whether non-UK assets in a trust are outside inheritance tax now depends on whether the settlor is a long-term resident at the time of a chargeable event, rather than on their domicile when the trust was set up. Existing excluded property trusts sit within this framework (gov.uk, as at August 2026, subject to change).