IHTM47021 - Long-term UK residence test: Transitional provisions

The long-term UK residence test comes into force on 6 April 2025.   

There are transitional provisions for non-domiciled (IHTM13000) or deemed domiciled (IHTM13024) individuals who are non-UK resident in 2025-26. For those individuals, they will be long-term UK resident (IHTM47000) if they satisfy the existing deemed domicile test (IHTM13024), namely whether they have been resident for at least 15 out of the 20 tax years immediately preceding the year of charge, and for at least one of the four tax years ending with the relevant tax year.  If they become UK resident again in 2026-27 or after, the new long-term UK residence rules will apply to them.  

This transitional provision will not apply to individuals who are UK domiciled under common law on 30 October 2024 and the new long-term UK residence test will apply to them from 6 April 2025.  An individual will be long-term UK resident if they have been resident in the UK for at least 10 out of the last 20 tax years immediately preceding the tax year in which the chargeable event (including death) arises (IHTM47001).    

This means that: 

  • An individual who is not domiciled or deemed domiciled in the UK on 30 October 2024 who becomes non-resident in 2025-26 will not be a long-term UK resident (however, if they return to the UK the usual long-term UK residence test will apply). 

  • An individual who is deemed domiciled in the UK on 30 October 2024 who becomes non-resident in 2025-26 will be a long-term UK resident until the start of their fourth year of non-residence (however, if they return to the UK the usual long-term UK residence test will apply). 

Example  

Nicholas is UK domiciled but became non-UK resident in 2009-10. He is UK domiciled under common law at 30 October 2024, the transitional provision does not apply to him.  

However, Nicholas is not a long-term UK resident because in 2025-26 Nicholas was not UK resident for 10 out of the previous 20 tax years.  He will not be subject to UK Inheritance Tax on his foreign personally held assets if he remains non-resident. 

Any foreign assets Nicholas settled into a trust would be relevant property up until 6 April 2025 (IHTM47023). They would become excluded property on that date because Nicholas is not long-term UK resident.  There will be a proportionate charge (IHTM42110) on 6 April 2025. Following that proportionate charge, as Nicholas is not a long-term UK resident, any foreign assets he settled into trust would be out of scope for Inheritance Tax from 6 April 2025 unless Nicholas becomes long-term UK resident in the future. 

Example 

Anil is non-domiciled on 30 October 2024 and was UK resident for 11 years, becoming non-resident in 2025-26.    

He never became deemed domiciled and, under the transitional provision would not come into the scope of Inheritance Tax on his non-UK assets from 6 April 2025.    

If Anil returned to the UK, the new long-term UK residence rules would apply to him. He would be subject to the 10 out of 20 years long-term UK residence test, which includes the years of residence in the UK up to 2024-25. 

Example 

Carina lived in the UK from 2005-06 and becomes non-resident in 2024-25. Carina was deemed domiciled in the UK on 30 October 2024 because she had been resident for 19 out of 20 tax years.  Under the transitional provision she will be a long-term UK resident until 2027-28 because at that time she will satisfy the requirement for her to have been non-resident in the four years ending with the year 2027-28 . If Carina returned to the UK, the new long-term UK residence rules would apply to her.  She would be subject to the 10 out of 20 years long-term UK residence test, which includes the years of residence in the UK up to 2023-24.