Inheritance Tax and Your UK Home When You Live Abroad

If you own a home in the UK and live abroad, UK inheritance tax can still apply to it. Since 6 April 2025 the rules depend on how long you have lived in the UK, not on your domicile. This guide explains what is taxed, how the long-term resident rule and its tail work, and what you can do about it.

This guide is general information, not tax advice. Inheritance tax is complex and your own position will differ, so take advice from a tax professional.

The short answer

• A UK home is a UK asset, so it is within UK inheritance tax wherever you live.
• If you are a long-term UK resident, your worldwide estate can also be taxed, including for a period after you leave.
• The standard rate is 40 per cent on the part of an estate above the nil-rate band of £325,000.
• Gifts and transfers to a spouse or civil partner are normally exempt, and unused allowances can pass to them.

Is a UK home taxed if you live abroad?

Yes. GOV.UK says that if you are based outside the UK, inheritance tax is paid on your UK assets, such as property or bank accounts in the UK. Some assets are excluded, including foreign currency accounts, overseas pensions and holdings in authorised unit trusts and open-ended investment companies.

So if you rent out your UK house, keep it as a future home or leave a flat empty, the value counts towards your estate. Moving abroad does not take it out of the net.

The long-term resident rule

The bigger change is for people who have lived in the UK for a long time. From 6 April 2025, advisers describe the test like this: if you have been UK tax resident for at least 10 of the last 20 tax years, you are a long-term resident. A long-term resident is exposed to UK inheritance tax on worldwide assets, not just UK ones. Some advisers note that a split year can count as a full year towards the 10.

If you do not meet the test, UK inheritance tax generally reaches only your UK assets, as set out above.

The tail after you leave

Leaving the UK does not end the exposure straight away. Advisers describe a tail during which a former long-term resident remains within worldwide UK inheritance tax. As they set it out:

• 10 to 13 years of UK residence: a tail of 3 years
• 14 years: 4 years
• 15 years: 5 years, and one more year of tail for each further year of residence
• 20 years or more: the maximum tail of 10 years

We could not load the official HMRC guidance for this page, so check the figures on GOV.UK or with an adviser before you rely on them.

A worked example

This example is illustrative and uses simple round numbers.

A widower lived in the UK for 16 years, then moved to Spain. He keeps a £450,000 flat in England and £300,000 in Spanish and offshore assets. If he dies in Spain two years later, he is still inside the tail on the advisers’ table, which would be 6 years for 16 years of residence. His estate is worth £750,000 and might face UK tax on all of it, including the Spanish assets.

If he dies after the tail has ended and is no longer a long-term resident, only the flat is UK-situated. The tax is then on the UK flat alone, after allowances. The same man, with the same assets, could face a very different bill depending on timing.

Allowances that reduce the bill

GOV.UK says there is normally no inheritance tax to pay on an estate below £325,000, and the threshold can rise to £500,000 if you give your home to children or grandchildren. Any unused threshold can be added to a surviving spouse or civil partner’s threshold.

• Nil-rate band. £325,000 per person, with unused amounts passing to a spouse or civil partner.
• Residence nil-rate band. An extra allowance when you leave your home to direct descendants. GOV.UK says it tapers away for estates above £2 million and the amount rises with the rules each year, so check the current figure.
• Spouse and civil partner exemption. Normally no tax on what passes to a spouse or civil partner.
• Charity. Gifts to charity are exempt, and leaving 10 per cent or more of the net estate to charity can reduce the rate to 36 per cent.

The residence nil-rate band has conditions. GOV.UK says the home must go to direct descendants and cannot sit in a trust with deferred entitlement. Check whether your UK home qualifies, especially if it is not your main residence.

Mortgages and rental property

A mortgage on the UK home is normally a debt of the estate, so it can reduce the taxable value. The details depend on how the loan is secured and how the home is owned, so ask your adviser. A let property still counts as part of your estate, even though the rent is income.

Ways to reduce the bill

These are options to discuss with a qualified adviser, not recommendations.

1. Use the spouse exemption and transfer unused allowances. This is simple but only defers the issue to the second death.
2. Make gifts. Gifts can fall out of the estate if you survive long enough. Gifting a home you still live in or use has special rules.
3. Use trusts. Trust rules changed in 2025 and depend on the settlor’s status, so advice is essential.
4. Insure the liability. Whole of life cover written in trust can pay the tax without the family selling the home. See our guide on term vs whole of life for expats.
5. Sell or restructure the property. Selling can change what is exposed, though capital gains and other taxes may apply.
6. Time your move. The tail makes the number of UK years and the date of departure matter.

Double taxation

Two countries may both claim tax on the same asset. GOV.UK says an executor may be able to reclaim tax under a double-taxation treaty where the UK and another country both charge inheritance tax. Treaties differ by country, and many countries have none for inheritance tax, so check the one where you live.

Wills matter more than people think

Tax is one issue. The other is whether your will works for assets in two countries, and whether UK and local rules clash. Read our overview of wills and trusts for expats and our page on inheritance tax for expats.

Common mistakes

• Assuming that leaving the UK ends UK inheritance tax.
• Using old domicile rules that no longer apply after April 2025.
• Not counting years of UK residence correctly.
• Forgetting the UK home when planning for the local country’s tax.
• Relying on a trust set up under the old rules without a review.
• Having a will that covers only one country.

Related reading

If you are thinking about long-term savings, read our guide to regular savings plans for expats and whether expats can keep a UK ISA. For the wider picture, see our expat savings hub.

Frequently asked questions

Do I pay UK inheritance tax on a UK home if I live abroad?

Yes. A UK home is a UK asset and counts towards your estate wherever you live.

What is a long-term resident for inheritance tax?

Someone who has been UK tax resident for at least 10 of the last 20 tax years, who can be taxed on worldwide assets from 6 April 2025.

How long does the inheritance tax tail last?

As advisers describe it, between 3 and 10 years after you leave, depending on how many years you lived in the UK.

What is the inheritance tax rate?

The standard rate is 40 per cent on the part of the estate above the nil-rate band of £325,000.

Can I avoid UK inheritance tax by selling my UK home?

Not necessarily. Selling changes what is held, but you may be taxed on worldwide assets as a long-term resident, and other taxes may apply. Take advice first.

This article is for information only and is not tax or financial advice. Inheritance tax rules and thresholds change. Check current GOV.UK guidance and take advice before acting.