20
Nov
The hidden tax trap catching long-term UK residents off-guard
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If you've spent significant time as a UK resident over the past 20 years and own property abroad, a recent change to inheritance tax rules may have implications you haven't yet considered.
The April 2025 inheritance tax changes explained
Since April, the UK has abandoned its old domicile-based system for inheritance tax in favour of a simpler residence test. If you've been UK resident for at least 10 of the previous 20 tax years, your worldwide assets now fall within the scope of UK inheritance tax, including any overseas property you own.
Even if you leave the UK, there's an ‘inheritance tax tail’ that continues for up to ten years, depending on how long you've been resident here.
This could mean not just unexpected tax bills, but lengthy legal battles and complex delays for grieving families.
Are your overseas assets now at risk?
The residence changes are just one piece of a complex puzzle. When your life and assets span multiple countries, several challenges can collide simultaneously.
Different countries often have conflicting inheritance rules. Some enforce ‘forced heirship’ laws that dictate who must inherit, regardless of your wishes – potentially clashing with the freedom UK wills typically allow.
Double taxation also becomes a real risk when two countries claim inheritance tax on the same assets. Meanwhile, practical obstacles like language barriers, different probate procedures and locating heirs overseas can create significant delays for grieving families.
When different countries' rules collide
These aren't theoretical problems. In my practice, I regularly see how these issues play out in real families' lives.
I've worked on one estate spanning five different countries, requiring carefully coordinated wills and inheritance tax planning across two generations. In another case, successfully proving a deceased person's foreign domicile saved the family around £180,000 in inheritance tax.
I've located over 30 beneficiaries scattered across Canada and Australia when someone died without a will, and navigated the complex interplay between English law and Croatian forced heirship rules while obtaining notarised foreign documents – a process that took months longer than a straightforward UK probate.
Getting specialist help before it's too late
The key is identifying these issues early and creating solutions that work across borders. Specialist solicitors with cross-border qualifications can draft UK wills that cover worldwide assets or prepare separate wills for each country that complement rather than cancel each other out.
They can review your UK residency history in light of April's changes and provide strategies to reduce unnecessary tax liabilities. For families wanting Sharia-compliant distributions, specialist advice ensures your estate follows Islamic principles while navigating UK law.
Most importantly, they coordinate with foreign lawyers and notaries to ensure smooth administration across borders when the time comes.
Partner, Amjed Zaman
Why this matters now
With more people than ever owning property abroad or having family overseas, these cross-border complications are becoming increasingly common. The April 2025 changes mean even those who thought they were outside the UK inheritance tax system may now be affected.
Sorting these matters out in advance can save your loved ones significant stress, time and money when they're least equipped to handle complex legal processes.
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