Long term resident
Summary of the new Long‑Term UK Resident regime
From 6 April 2025, the UK shifts from a domicile‑based test for inheritance tax (IHT) and related international tax issues to a residence‑based regime.
Key points:
- An individual will typically be classed as a “Long‑Term UK Resident” (LTR) in a tax year if they have been UK tax‑resident for 10 or more of the previous 20 tax years.
- Once someone becomes an LTR, their worldwide assets (not just UKsituated assets) may be subject to UK IHT on death or certain transfers.
- After leaving UK residence, an LTR does not immediately lose their status. A “tail” period of 3 to 10 tax years applies depending on how long they were resident before exiting.
- Trusts and non‑UK assets: The residence status of the settlor now matters. Previously excluded property trusts (EPTs) may lose their exclusion if the settlor becomes an LTR.
- Transitional rules apply for individuals who left the UK or whose domicile status was different before the change‑over.
In short: For clients with significant international assets, multiple residences or trust structures, the stakes for UK tax and estate planning have shifted. The regime places emphasis on residence history rather than traditional domicile status.
How Emulous Accounting can help
At Emulous Accounting, we specialise in international tax, cross‐border wealth and estate planning. Here are the ways we can assist clients navigating the new regime:
- Residency & history assessment
- We review your past UK tax residence history (years resident/non‑resident) to determine whether you are or might become an LTR.
- We model future scenarios (for example if you plan to leave the UK, re‑enter, hold dual residence etc) to identify the tail exposure and IHT risk.
- We monitor and interpret the UK statutory residence test and how your individual facts (visits, ties, days in UK) interact with the new rules.
- IHT exposure modelling on worldwide assets
- We map your global asset base (UK and overseas) and evaluate how becoming an LTR might bring non‑UK assets into UK IHT scope.
- For existing trusts or offshore structures, we assess whether these remain protected/“excluded property” in light of the residence‑based regime.
- We project potential IHT liabilities and help you structure your estate to reduce surprise exposure.
- Trusts & offshore structures review
- For clients who have non‑UK trusts (especially EPTs) we provide a detailed review: settlor residence status, additions after 30 October 2024, whether status will change on 6 April 2025 etc.
- We advise on termination, restructuring or re‑settling trusts if that becomes necessary to protect the intended estate/planning outcome.
- We assist trustees and beneficiaries with reporting duties and compliance when residence status changes trigger charges (10‑year relevant property charge, exit charges etc).
For more detailed information and to arrange a free consultation tax, please contact us.
13 Balmoral Road
Willesden Green
London
NW25DX
Company Number
11457978
