Since 6 April 2025, UK Inheritance Tax has followed long-term UK residence instead of domicile. You are a long-term UK resident if you were UK tax resident for at least 10 of the previous 20 tax years, and after you leave the UK you stay in scope for between three and ten further tax years depending on how long you lived there.

For a British expat in Dubai, that single change decides whether a Dubai apartment, a UAE bank account and an offshore portfolio sit inside a 40% charge or outside it. This guide sets out the test, the exit clock, what remains taxable even after you fall out of the regime, the spouse rule that catches mixed-nationality couples, and why a DIFC will does nothing at all about any of it.

What Changed on 6 April 2025

Domicile is a common law concept about where your permanent home is, and it was notoriously sticky. Section 44 of the Finance Act 2025 replaced it for Inheritance Tax purposes by inserting section 6A into the Inheritance Tax Act 1984, which defines a long-term UK resident by counting tax years rather than intentions.

HMRC’s manual confirms the position directly: from 6 April 2025 Inheritance Tax moved from being based on domicile to being based on long-term UK residence. The practical gain for expats is certainty, because a day count can be evidenced and an intention cannot.

Domicile has not disappeared entirely. It still governs deaths and lifetime transfers before 6 April 2025, some settled property where the settlor died or the property was settled before that date, and any double taxation convention whose own wording uses common law domicile.

The Test: 10 Out of 20 Tax Years

You are a long-term UK resident in a tax year if you were UK tax resident for either the previous 10 consecutive years, or a total of 10 or more years within the previous 20. Residence for those years is decided by the statutory residence test, and for 2012-13 and earlier by the old income tax rules.

Two carve-outs matter. A person under 20 has the test scaled to the number of whole tax years they have been alive, and nobody under the age of 1 can be a long-term UK resident.

The Transitional Escape Route

There is a specific exit for people who were already out of the UK when the reform was announced. GOV.UK states that you will not be a long-term UK resident if, on 30 October 2024, you did not have UK domicile or deemed domicile status, you were non-resident for the 2025-26 tax year, and you do not return to the UK.

A separate rule applies to those who did hold deemed domicile on 30 October 2024. If you were non-resident for 2025-26 and you do not return, you stop being a long-term UK resident after three years of non-residence.

How Long You Stay in Scope After You Leave

Leaving the UK does not switch the charge off. HMRC’s introduction to the regime states that a long-term UK resident who becomes non-UK resident remains in scope for a minimum of three years and a maximum of ten, depending on how long they resided in the UK.

GOV.UK sets out the first steps of the ladder explicitly, and the pattern from there adds one tail year for each further year of UK residence until it reaches the ten-year ceiling.

Years of UK residence in the previous 20 Tax years you remain in scope after leaving Source
Fewer than 10 None, the test is not met IHTA 1984 s.6A(1)
10 to 13 3 Stated on GOV.UK
14 4 Stated on GOV.UK
15 5 Stated on GOV.UK
16 to 19 6 to 9, one year per additional year of residence Pattern, ceiling confirmed in IHTM47001
20 10, the maximum IHTM47001

One further rule resets the clock in your favor. If you return to the UK after 10 consecutive years of non-residence, the 10 out of 20 test starts fresh, and only the year of return and later years count.

What This Looks Like on a Real Timeline

Take someone who lived and worked in the UK from 1999, moved to Dubai in the 2019-20 tax year, and has not been UK resident since. On leaving they had 20 out of 20 years of UK residence, so they carry the maximum ten-year tail.

Their worldwide estate, including the Dubai apartment and the UAE bank account, stays within UK Inheritance Tax until the 2029-30 tax year. The Golden Visa in their passport changes nothing about that date, and neither does a UAE Tax Residency Certificate, which speaks to income tax treaty relief rather than to Inheritance Tax.

What Is Still Taxed After the Tail Runs Out

Falling out of long-term UK residence removes non-UK assets from the charge, not UK ones. Foreign property is chargeable on death or on a lifetime transfer only if the deceased was a long-term UK resident immediately before it, which is the whole point of the excluded property rules.

Assets located in the UK stay in scope indefinitely, whoever owns them and wherever they live. The most common ones for a Dubai-based owner are a buy-to-let flat in the UK, a UK bank or building society account, shares in UK-incorporated companies, and UK-registered pension death benefits from April 2027.

UK residential property is the sharpest of these. Value attributable to UK residential property remains chargeable even where the individual is not a long-term UK resident and even where the property is held through an offshore company or trust, which closed the structuring route that used to work.

Asset In scope while long-term UK resident In scope after the tail ends
Dubai apartment or villa Yes No
UAE bank account and UAE-held investments Yes No
Offshore portfolio or non-UK company shares Yes No
UK buy-to-let or former family home Yes Yes
UK residential property held through an offshore company Yes Yes, to the extent of the residential property value
UK bank account and UK-incorporated shares Yes Yes

The Numbers That Apply Either Way

The nil-rate band is £325,000 and the rate above it is 40%. A residence nil-rate band of up to £175,000 can apply where a home is left to direct descendants, and it tapers away once the estate exceeds £2 million.

Gifts made in the seven years before death can be brought back in, with taper relief between three and seven years, and only where total gifts in that period exceed the nil-rate band. Tax is due by the end of the sixth month after the month of death, and interest runs from that point.

The Spouse Rule That Catches Mixed-Nationality Couples

Transfers between spouses are normally exempt without limit. That exemption is capped where the transferor is a long-term UK resident and the recipient spouse is not.

Section 18(2) of the Inheritance Tax Act 1984 was amended with effect from 6 April 2025 to replace the domicile wording with long-term UK residence, and section 18(2A) fixes the ceiling at the nil-rate band. In cash terms, a British long-term UK resident who leaves everything to a non-long-term-resident spouse gets an exemption of £325,000, and the rest is chargeable.

This is a live problem in Dubai, where one spouse is often a long-standing British expat still inside the ten-year tail and the other has never been UK resident at all. The Act allows the recipient spouse to elect to be treated as a long-term UK resident under sections 267ZC to 267ZE, which restores the unlimited exemption at the price of bringing that spouse’s worldwide estate into charge.

The election is a trade, not a fix, and it interacts with which spouse is likely to die first and where the assets actually sit. It is the single point in this area where paying for advice is most obviously worth it.

Your DIFC Will Does Not Change Any of This

A will registered with the DIFC Wills Service or the Abu Dhabi Judicial Department decides who inherits your UAE assets and under which law, and it keeps Sharia default rules away from a non-Muslim estate. It has no effect on where those assets are treated as situated for UK tax, and no effect on your residence history.

The two questions are genuinely separate, and expats routinely merge them. Succession planning answers “who gets it and how fast”, which is why choosing between the DIFC, Dubai Courts and the ADJD register matters, and why the civil succession default under Federal Decree-Law 41/2022 is worth understanding before you rely on it. Inheritance Tax answers “how much of it survives”, and that turns on the 10 out of 20 count alone.

The same applies to holding structures. A DIFC or ADGM foundation can solve forced heirship and probate delay, and the trade-offs of holding Dubai property in a company rather than personally are real, but neither removes UK residential property from the UK charge or shortens your tail.

Reporting: IHT400 and Form IHT401a

Claiming that the deceased was not a long-term UK resident is an active claim, not a default. HMRC’s manual states that where a taxpayer or agent considers the deceased was not a long-term UK resident, they must submit form IHT400 together with form IHT401a.

HMRC then considers the question after the grant has been issued, and the file is passed to its Risk team, which decides whether to accept the claim or refer it to Compliance. That sequence is worth understanding by the executor, because probate can complete while the residence question is still open.

What makes the claim survive is evidence of the residence history, and that evidence has to be assembled while the person is alive. A run of UAE entry and exit records, tenancy contracts, Emirates ID renewals and employment records is far easier to produce now than by an executor later, which is why an organized personal document file is the practical output of reading this.

What Changes Again in April 2027

The Finance Act 2026 brings most unused pension funds and pension death benefits into the estate for Inheritance Tax for deaths on or after 6 April 2027, with personal representatives rather than scheme administrators liable to report and pay.

Death in service benefits from a registered pension scheme, and dependants’ scheme pensions from defined benefit or collective money purchase arrangements, are excluded. Everything else in a UK pension pot stops being a tax-free wrapper for the next generation.

For a UAE resident that lands on top of the residence question rather than replacing it. If you are still inside the tail in April 2027 the pot is inside your estate, and if you are outside it the UK pension is still a UK asset. Our companion guide covers how a UK pension is taxed while you live in the UAE, including the treaty relief that makes drawdown income tax free here.

A Practical Checklist

  • Count your tax years, not your calendar years. The UK tax year runs 6 April to 5 April, and a partial year of residence still counts as a year.
  • Write down the date your tail ends. For most long-term expats it is a specific 5 April, and it is the single most useful number in your file.
  • Separate UK-situs assets from the rest. Those stay in charge permanently, so the planning question for them is different.
  • Check the spouse position before assuming a nil bill. A £325,000 cap on transfers to a non-long-term-resident spouse turns an assumed zero into a real liability.
  • Keep residence evidence contemporaneously. Entry and exit records, tenancy contracts and Emirates ID history are what an executor will need.
  • Register a UAE will anyway. It solves a different problem, and the estate that is frozen for six months costs a family more than the tax often does.

What We Could Not Verify

GOV.UK publishes the tail length explicitly only for 10 to 13, 14 and 15 years of residence, and HMRC’s manual confirms the three-year floor and ten-year ceiling. The one-year-per-additional-year steps between 16 and 19 follow from those two statements rather than from a published table, so an executor dealing with a borderline case should confirm the exact figure against form IHT401a and the current manual.

There is also no UK-UAE Inheritance Tax convention. The 2016 Double Taxation Convention covers income and capital gains, so it does not relieve Inheritance Tax, and none of the relief this guide describes comes from a treaty.

FAQ

Do I still pay UK Inheritance Tax if I live in Dubai?

Yes, if you are still a long-term UK resident, which means you were UK tax resident for at least 10 of the previous 20 tax years. In that case your worldwide estate is in charge, including UAE property and UAE bank accounts. Once the tail of between three and ten years runs out, only your UK-situs assets remain chargeable.

How long after leaving the UK am I free of Inheritance Tax on my Dubai assets?

Between three and ten tax years, set by how many of the previous 20 years you were UK resident. Ten to 13 years of residence gives a three-year tail, 14 years gives four, 15 years gives five, and the maximum of ten years applies to someone resident for the full 20.

Is domicile still relevant to UK Inheritance Tax?

Only in specific situations. It governs deaths and lifetime transfers before 6 April 2025, some settled property where the settlor died or settled the property before that date, and any double taxation convention drafted in terms of common law domicile. For a straightforward death after 6 April 2025 it has been replaced by the long-term UK residence test.

Does my UAE Golden Visa or Tax Residency Certificate help?

No. Neither is part of the test. A UAE Tax Residency Certificate supports income tax treaty relief on things like pension income, and a Golden Visa is an immigration status, but Inheritance Tax scope depends only on your count of UK tax years of residence.

My spouse has never lived in the UK. Is everything I leave them exempt?

Not if you are a long-term UK resident and they are not. Section 18(2) of the Inheritance Tax Act 1984 caps the spouse exemption at the nil-rate band, currently £325,000, in that situation. Your spouse can elect to be treated as a long-term UK resident to restore the unlimited exemption, but that brings their own worldwide estate into charge.

Is my Dubai apartment subject to UK Inheritance Tax?

It is while you are a long-term UK resident, because the charge on a long-term resident is worldwide. Once you cease to be one, foreign property becomes excluded property and drops out. Nothing about registering it with the Dubai Land Department or holding it through a UAE company changes that answer.

What about the UK flat I kept and rent out?

It stays in charge permanently. UK residential property remains chargeable even where the owner is not a long-term UK resident and even where it sits inside an offshore company or trust, so a UK buy-to-let is the asset most likely to generate a bill for a long-departed expat.

What form do my executors need to file?

If they claim you were not a long-term UK resident they must submit form IHT400 together with form IHT401a. HMRC reviews the claim after the grant is issued, so probate can complete before the residence position is settled. Tax is due by the end of the sixth month after the month of death.

Does a DIFC will reduce UK Inheritance Tax?

No. A DIFC or ADJD will governs who inherits your UAE assets and under which law, which is a succession question. Inheritance Tax scope is a residence question and is unaffected by where a will is registered.

Will my UK pension be taxed on my death?

From 6 April 2027 most unused pension funds and death benefits form part of the estate for Inheritance Tax, with personal representatives liable to report and pay. Death in service benefits from a registered scheme and dependants’ scheme pensions from defined benefit or collective money purchase arrangements are excluded from the change.

Official Sources

Information current as of August 2026. UK tax thresholds and rules change at least annually, and the long-term residence rules are new enough that HMRC guidance is still being expanded. Verify your position with HMRC and take regulated advice before making an election, a gift or a change of structure. This article is general information and is not tax or legal advice.