Cross-border Estates And The New "Non-dom" Regime: UK IHT Reporting On Death

The changes to the non-dom regime that came into effect in April 2025 have been much discussed. Six months on, we now have practical experience of inheritance tax (IHT) reporting on the death of a non-dom and set out some key points for executors and their advisers.

What has changed?

Before 6 April 2025, if a deceased person was domiciled outside the UK at the time of their death, their UK IHT exposure on their estate was limited to their UK assets. Domicile has always been a tricky concept to define, but broadly it amounts to where the individual considers their home to be, intending to see out their days there.

Since 6 April 2025, the concept of "domicile" is no longer a determining factor for ascertaining the scope of UK IHT. Instead, a new residence-based test has been introduced. Individuals who qualify as "long-term residents" (LTRs) under this test are exposed to IHT on all of their worldwide assets, whereas non-LTRs are exposed to IHT only on their UK assets and their non-UK assets connected with UK residential property. An individual is considered to be an LTR once they have been UK resident for at least 10 out of the last 20 tax years. Once an LTR, the individual remains exposed to UK IHT on all of their worldwide assets for a period of up to 10 years. This is known as the "tail".

From 6 April 2013, a person's residence has been determined by the statutory residence test. This test is explained in further detail here: Statutory Residence Test (2023) | Charles Russell Speechlys

Why does this matter for executors?

For deaths on or after 6 April 2025, executors must provide detailed information to HMRC about a deceased person's residence history and overseas assets using a new form called Schedule IHT401a if the deceased was not an LTR and their assets in the UK exceed £150,000. In this form, executors are required to declare:

• whether the deceased left any assets outside the UK and, if so, the approximate value of those assets;
• whether any foreign tax is to be paid on these assets in the UK as a result of the deceased's death;
• details of the deceased's tax residence, starting with the tax year before the deceased died and going back a further 19 years; and
• details of the deceased's tax residence, starting with the tax year before the last year in which the deceased was UK resident and going back a further 18 years.

This means that, in some scenarios, executors may have to provide HMRC with details of the deceased's tax residence for up to 39 years before the deceased's death. If recalling events from nearly four decades ago is difficult, it will be even more challenging for executors in the absence of clear records.

To gather this information, the executors of non-LTRs would be well advised to:

• collect records demonstrating the deceased's residence during their lifetime. Tax returns submitted by the deceased will be helpful, and passports with entry/exit stamps may be too;
• contact the deceased's tax advisers or accountants in the UK and in other countries where the deceased had connections or lived;
• ask questions of the deceased's family, friends and colleagues to build up a picture of the deceased's life;
• collect any available documentation regarding any foreign tax paid on the deceased's UK assets—accountants and tax advisers in the other countries concerned could help here; and
• seek professional advice from a lawyer or a tax adviser with experience in administering cross-border estates.

If you or your clients are non-LTRs (or might be), starting to compile this information during lifetime will be invaluable to executors in the future.

Understanding the situs of assets (that is, whether an asset is a UK asset for IHT purposes) remains important. Determining situs is not always as straightforward as it may first appear, and we will explore that topic separately.

Domicile is still relevant

In this new LTR era, we must not forget about domicile. From an IHT reporting perspective, common law domicile remains relevant when determining the application of the UK's double taxation treaties. The UK has double taxation treaties relevant to IHT with:

• France;
• India;
• Ireland;
• Italy;
• The Netherlands;
• Pakistan;
• South Africa;
• Sweden;
• Switzerland; and
• the USA.

If executors are claiming that a double taxation IHT treaty applies, Schedule IHT401 needs to be completed as well as Schedule IHT401a. Schedule IHT401 is the form used to explain the deceased's domicile. The form asks for information about where the deceased was born and their domicile of origin, their education and work history, their visits to the UK, and why the executors believe the deceased did not intend to remain in or return to the UK.

To conclude

If good records of residence are maintained, the executor's job of reporting to HMRC will be much easier. Clients and advisers can both play a helpful part in this. Domicile is still relevant where double tax treaties may be in play, and also for understanding how succession laws will apply (more on which another time), so it should not be overlooked.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.