UK Inheritance Tax on Property: What Changed for Non-Residents in 2026
The UK scrapped domicile as the basis for inheritance tax, and every overseas owner of UK property needs to understand what replaced it.
This Banke guide covers the new system.
The Non-Dom Regime Is Gone
The non-dom regime was abolished in the 2024 Autumn Budget, effective 6 April 2025. Residence, not domicile, is now the connecting factor for whether worldwide assets fall inside UK inheritance tax.
The New Test: Long-Term UK Resident
The key test is now whether you've been UK resident for 10 of the previous 20 tax years. If you've been non-resident for at least 10 of the last 20 years, only your UK-situs assets fall inside UK IHT — your overseas assets sit outside its scope.
Your UK Property Is Always in Scope
UK residential property is always UK-situs, regardless of your residence status or long-term resident test result. Every overseas investor holding UK property has inheritance tax exposure on that specific asset — there's no residence-based exemption that removes UK property itself from scope.
Trust Structures Changed Too
From 6 April 2025, whether non-UK trust assets keep excluded-property status depends on whether the settlor counts as a long-term resident when a chargeable event occurs — a meaningful change for anyone who structured UK property holdings through a trust under the old rules.
A Further Relief Cap From April 2026
From April 2026, Business Property Relief and Agricultural Property Relief are capped at 100% on the first £1 million of combined qualifying property, then 50% on the excess — relevant if your UK holdings extend beyond residential property.
Talk to Banke
Contact Banke and pair this with UK estate planning advice specific to your residence history.