Can I Avoid Inheritance Tax by Moving Abroad? What UK Expats Need to Know

Belgravia Capital
May 31
3 min read

As more Britons relocate overseas - whether for lifestyle, work, or tax reasons - one question we often hear at Belgravia Capital Wealth Management is:

“Can I avoid inheritance tax by moving abroad?”

The short answer is: not necessarily.

Simply living abroad doesn’t mean HMRC loses its grip on your estate.

UK inheritance tax (IHT) is based on domicile, not just residence - and that distinction makes all the difference.

In this article, we’ll explain what UK domicile means, how IHT applies to British expats, and whether moving abroad can truly help reduce your inheritance tax bill.

How Inheritance Tax Works in the UK

UK inheritance tax is charged at 40% on the value of an estate above:

£325,000 (nil-rate band), plus
£175,000 (residence nil-rate band) if leaving your home to direct descendants

While there are exemptions for spouses and charities, estates over the threshold often face large tax bills — which is why many look abroad for relief.

Does Moving Abroad Exempt You from Inheritance Tax?

Not automatically.

That’s because UK inheritance tax is based on your domicile, not just where you live.

Domicile is a legal concept referring to your long-term, permanent home.
Even if you live abroad for many years, you may still be considered UK-domiciled - and subject to IHT on your worldwide estate.

Types of Domicile Explained

There are three kinds of domicile under UK law:

1. Domicile of Origin

Typically inherited from your father at birth (e.g., if your father was UK-based, you’re likely UK-domiciled).

2. Domicile of Dependency

Applies to children and changes with their parents’ domicile until age 16.

3. Domicile of Choice

You may acquire this by permanently settling in another country, cutting ties with the UK, and making a new country your permanent home.

However, proving a domicile of choice is difficult and requires clear evidence of permanent intention to remain abroad.

The 15-Year Rule (Deemed Domicile)

Even if you acquire a domicile of choice elsewhere, HMRC may still treat you as UK-domiciled for inheritance tax purposes if you meet the 15 out of 20 years rule:

If you’ve been UK tax resident for 15 of the previous 20 tax years, you’re treated as deemed domiciled in the UK.
This means your worldwide estate remains liable to UK IHT until you’ve been non-resident long enough to break this rule.

How to Sever UK Domicile (and Reduce IHT Exposure)

To genuinely remove yourself from the UK IHT net, you need to:

1. Leave the UK permanently, not just temporarily.

2. Establish strong, long-term ties abroad (property, family, work).

3. Sever key UK ties, including:

Selling UK property
Closing UK bank accounts
Cancelling UK private memberships
Updating wills and tax residency

You’ll also need to avoid UK tax residence for more than five years, ideally 20 years to shake off “deemed domicile” status.

What About UK Assets After Moving?

Even if you’re not UK-domiciled:

UK-situated assets, like UK property or UK shares, may still be subject to UK IHT.
The UK retains taxing rights on these assets, regardless of your tax residency or domicile.

So while moving abroad may reduce IHT on overseas assets, UK-based wealth may still fall under HMRC’s jurisdiction.

Double Tax Treaties and International Planning

The UK has Inheritance Tax Treaties with a limited number of countries (e.g., the US, India, France, Italy).

These treaties can:

Help avoid double taxation
Determine which country has taxing rights over your estate
Influence how your domicile is assessed

Professional advice is essential if you’re dealing with multiple jurisdictions or hold dual nationality.

Are There Better Alternatives Than Moving?

Relocating to reduce IHT is a significant life decision - and not always necessary.

Consider other strategies that can be just as effective, including:

Lifetime gifting- Trust planning
Life insurance policies held in trust
Business and agricultural reliefs
Maximising allowances and spousal transfers

Often, a strategic UK-based plan is safer, simpler, and more practical than a permanent move abroad.

How Belgravia Capital Wealth Management Can Help with IHT planning

If you’re living overseas or planning to move, we help you:

Review your domicile and tax residency position
Assess your global inheritance tax exposure
Structure your estate across borders
Minimise UK IHT on UK and international assets

We work closely with legal and tax partners to provide joined-up international estate planning.

Conclusion: Can You Avoid Inheritance Tax by Moving Abroad?

Not immediately — and not always.

Unless you take careful steps to change your domicile, sever UK ties, and remain non-resident for many years, your estate may remain liable for UK inheritance tax.

Thinking about relocating or already an expat?