The warning comes as the Government’s abolition of the long-standing non-dom regime increases inheritance tax exposure for internationally mobile individuals and expatriates.
While many overseas residents assume that relocating abroad removes them from the UK’s IHT net, the reality is far more complex.
Under the new residence-based rules, non-UK assets can remain subject to UK inheritance tax for a “tail period” after an individual leaves the country. The length of time assets remain within the scope of IHT depends on how long the individual was previously resident in the UK.
According to recent research, an estimated 4.8 million Britons living overseas could still be affected by UK inheritance tax rules.
Further changes are also on the horizon. From April 2027, unused pension pots and certain death benefits are expected to be brought into the inheritance tax regime, potentially increasing tax bills for families and creating complex cross-border tax issues for beneficiaries.
Our tax advisor, Leo Sarkeshik, said many expatriates remain unaware of how exposed they could be.
“One of the biggest misconceptions among Britons moving overseas is that leaving the UK automatically removes them from the inheritance tax system. In reality, recent reforms mean many individuals will continue to have worldwide assets within the UK tax net for years after departure,” he said.
“The introduction of residence-based inheritance tax rules and the forthcoming inclusion of pension assets could significantly increase liabilities for families who have not reviewed their estate planning arrangements.”
“Furthermore, beneficiaries could face multiple layers of taxation where overseas succession taxes apply alongside UK inheritance tax and income tax charges.”
“For internationally mobile families, the interaction between UK inheritance tax, local succession taxes and income tax can create unexpected outcomes. Careful planning is essential to avoid unnecessary tax leakage and ensure wealth passes efficiently to the next generation.”
Tax tips for Britons living overseas
Expatriates should take steps now to understand their potential exposure including:
Review your residence history
The amount of time you spent living in the UK can affect how long your worldwide assets remain subject to inheritance tax after departure.
Assess your pension arrangements
With pension pots expected to fall within the IHT net from 2027, individuals should understand how these assets fit into their wider estate planning strategy.
Consider cross-border tax exposure
Some countries impose their own inheritance, estate or succession taxes, which can overlap with UK liabilities.
Update wills and estate plans
Existing wills may not adequately address assets held across multiple jurisdictions or reflect recent legislative changes.
Seek specialist advice early
Cross-border tax and succession planning can be highly complex. Obtaining advice before major life events can help avoid costly mistakes and unexpected tax bills for beneficiaries.
Need advice on overseas inheritance tax planning?
The Rouse Tax Team advises UK expatriates, internationally mobile families and non-UK residents on inheritance tax, estate planning and cross-border tax matters.
To discuss your circumstances and how we can help you, contact our tax team today.
Leo advises on personal tax compliance and planning, with expertise in tax residency, cross-border issues, capital gains tax and director responsibilities.
