One of the most common worries for British expats in Europe is whether their move abroad has changed their UK inheritance tax position. The short answer is: it might not have changed it at all. Domicile is much stickier than tax residence, and UK inheritance tax can follow you long after you have left.
This article explains what stays within the UK inheritance tax net, what does not, and why your country of residence also matters.
Domicile vs residence: why it matters
Tax residence is about where you live now. Domicile is about where your permanent home is considered to be. You can be Swiss or Spanish tax resident and still be UK-domiciled for inheritance tax purposes.
If you are UK-domiciled, HMRC can apply inheritance tax to your worldwide assets. If you are not UK-domiciled, inheritance tax generally applies only to your UK assets. Changing domicile is possible, but it usually requires a clear intention to remain abroad permanently and to cut most residential ties with the UK.
Which assets stay inside the UK net?
For UK-domiciled individuals, almost everything is potentially liable: UK property, bank accounts, investments, overseas property, and even some pension death benefits in certain circumstances. For non-UK domiciled individuals, the focus is on UK-situs assets such as UK real estate, UK bank accounts, and UK listed shares.
Pensions are usually outside the estate for inheritance tax purposes, but the rules on who receives death benefits and how they are taxed can be complicated, especially when a beneficiary lives abroad.
The seven-year rule and gifts
If you make a gift while alive, it is usually a potentially exempt transfer. If you survive for seven years, it falls outside your estate. If you do not, it may be added back and taxed, often on a tapering scale. Gifts into most trusts are treated differently and may attract an immediate charge.
This matters for expats because people often move money around when they relocate — selling a UK property, opening accounts abroad, or helping children with deposits. Without realising it, they can create inheritance tax events that need to be recorded.
How does your country of residence affect things?
Even if your estate is not taxable in the UK, your country of residence may have its own succession or inheritance taxes. Switzerland, Spain, France and Portugal each have very different rules, including forced heirship in some cases.
The UK has double-taxation conventions with some countries for inheritance tax, but not all. Where there is no convention, your estate could be taxed twice unless local rules provide a credit.
Wills and expats
A will drafted in the UK may not work well abroad. Many European countries apply forced heirship rules that can override a will leaving everything to a spouse. Some expats use a separate local will for their country of residence alongside, or instead of, their UK will. This is a specialist legal area, and the wrong structure can be expensive to unwind.
What about property in the UK?
UK residential property remains within the inheritance tax net regardless of the owner's residence or domicile status, so non-domiciled expats who keep a UK home need to plan for this. The value of the property counts towards the estate, and reliefs such as the residence nil-rate band may apply if it is left to direct descendants.
What can you do?
The starting point is clarity: know your domicile, list your worldwide assets, understand the inheritance tax regime in your country of residence, and check whether your will works in both jurisdictions. From there, planning options might include lifetime gifting, trust structures, insurance, or restructuring how assets are held.
Inheritance tax and cross-border succession are complex, and the right answer depends heavily on your family situation, where your assets are, and where your beneficiaries live. Generic online guidance is rarely enough.
Getting help
We work with Swiss Nationals, and British and European expats to review how UK inheritance tax interacts with their country of residence and their overall estate plan. We do not draft wills ourselves, but we coordinate the financial side with the right legal advisers so the plan is consistent.
