From 6 April 2025 UK inheritance tax follows residence, not domicile. What the 10-of-20-year test means for US citizens in Britain, and where US tax bites.
Since 6 April 2025 the UK decides who is exposed to inheritance tax on worldwide assets by counting tax years of residence rather than by asking where a person is domiciled. Someone who has been UK tax resident for at least 10 of the previous 20 tax years is a long-term UK resident, and their assets anywhere in the world fall within the scope of IHT. For an American living in Britain that new test sits on top of a US system that taxes its citizens' worldwide estates and lifetime gifts wherever they live, so one estate can be inside both regimes at once.
This article is general information, not legal, tax or estate planning advice, and nothing in it recommends any particular will, trust or gifting structure.
Domicile is a common law concept: broadly, the country a person treats as their permanent home. For inheritance tax it set the reach of the charge. A UK-domiciled individual was exposed on worldwide assets; someone domiciled elsewhere only on UK-situated property. Because domicile is sticky, intention-laden and intensely fact-specific, it produced decades of argument and very few clean answers.
Statute layered a mechanical rule on top. GOV.UK records that from 6 April 2017 to 5 April 2025 you were UK domiciled for IHT if you were resident in the UK for 15 of the previous 20 tax years, with a separate category for formerly domiciled residents born in the UK with a UK domicile of origin who had acquired a domicile of choice elsewhere and then returned. That guidance now states that from 6 April 2025 the deemed domicile rules are replaced by the long-term UK resident rules.
Domicile has not vanished. HMRC notes it remains relevant to deaths and lifetime transfers before 6 April 2025, to certain settled property, and — the point that matters most to Americans — where a double taxation convention is built on common law domicile concepts. The US estate and gift tax convention is exactly such an agreement.
The test is a count. HMRC states that an individual is a 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. GOV.UK's public page puts the same thing as being tax resident for the previous 10 consecutive years, or a total of 10 years or more within the previous 20. Three consequences follow.
For an American who came to London on a two-year secondment and is now in year nine, nothing needs to change about where the assets sit or who manages them; the tenth tax year does the work on its own.
The old deemed domicile regime had a run-off period, and so does the new one. GOV.UK states that you can keep long-term UK residence for up to 10 tax years after you leave the UK, and that the length depends on how long you were resident beforehand: three years where you were resident for 10 to 13 years, four years at 14 years, five at 15, and rising towards the 10-year maximum for longer periods of residence.
Two further points matter. Individuals who had deemed UK domicile on 30 October 2024 stop being long-term UK residents after three years of non-residence. And if you return to the UK after 10 consecutive years of non-residence, the 10-out-of-20 test resets.
The planning implication is unglamorous but real: leaving Britain does not end UK exposure, and the years immediately after departure are often exactly when people restructure, gift or settle assets on the assumption that it has.
The US position is simpler to state and harder to escape. The IRS is explicit that US citizens are subject to US estate taxation with respect to their worldwide assets, even if they are not residents of the US. The instructions to Form 706 put the same principle in asset terms: the gross estate includes all property in which the decedent had an interest, including property outside the United States.
Citizenship alone is the connecting factor: no requirement to live in America, hold US-situs assets, or have filed anything recently. A US citizen who has lived in Britain for thirty years, banks in sterling and owns nothing in the United States is still inside the US estate tax system, and the same logic runs through the gift tax. Our longer treatment of the US side is in US estate and gift tax for Americans in the UK.
Put the two systems side by side and the overlap is obvious: a long-term UK resident who is also a US citizen has two tax authorities entitled to look at the same worldwide estate on the same day.
There is an agreement for this. Alongside the better-known income tax treaty, the UK and the United States have a separate convention covering estates and gifts, in force since 11 November 1979 and listed by GOV.UK among the UK's inheritance tax double taxation conventions. It contains machinery for deciding which country has the primary claim over particular property, tie-breaker provisions where an individual is connected to both countries, and relief where both nonetheless tax the same transfer. GOV.UK also confirms the domestic backstop: HMRC gives credit against Inheritance Tax for tax charged by another country on assets sited in that country.
What the convention does not do is make the problem disappear. Relief is claimed on the facts of a particular estate and asset, not applied automatically. Its concepts predate the 2025 reform and are built on domicile, which is why HMRC flags that domicile remains relevant where a treaty uses it. Working out how an agreement written in the language of domicile interacts with a charge now driven by a residence count is specialist work, asset-by-asset rather than global.
This is the most common structural error in Anglo-American estates, and it is entirely avoidable. Where both spouses are US citizens, property passing to the surviving spouse generally qualifies for an unlimited US marital deduction, so nothing is taxed on the first death. That treatment is not available on the same terms where the surviving spouse is not a US citizen. The IRS instead provides for an election to treat property as passing to a qualified domestic trust under section 2056A, and its Form 706-QDT instructions confirm the QDOT rules apply only where a decedent's surviving spouse is not a US citizen. A QDOT carries its own requirements, including a US trustee, and ongoing filing obligations.
Lifetime gifts follow a parallel logic: the instructions to Form 709 do not extend unlimited treatment to gifts to a non-US-citizen spouse, applying an annual limit instead. Routine spousal transfers that would be invisible between two Americans can become reportable, and potentially taxable, events.
The UK has a mirror-image restriction. HMRC states that where the transferor is a long-term UK resident but the spouse or civil partner is not, the spouse exemption is limited to the nil-rate band applying at the date of transfer, measured against the cumulative total of transfers to that spouse. An election is available to be treated as a long-term UK resident for all IHT purposes, after which transfers qualify for full spouse exemption — but HMRC is clear that once made it cannot be revoked and will only lapse after 10 consecutive years of non-UK residence. That is a long-lived decision that interacts with the US position. The wider picture is in our guide to US tax and a non-American spouse.
It is tempting to assume that two systems with similar aims will roughly offset. They do not, for structural reasons.
Because the specific figures in both countries change with budgets and legislation, no article should be relied on for a current band, rate or exemption. Check each against official guidance when you act.
The practical failures here are rarely exotic. They are ordinary documents doing exactly what they were drafted to do, in the wrong jurisdiction. A US revocable living trust is standard American practice for avoiding probate; its UK treatment is a separate question to be answered rather than assumed. A UK will leaving everything outright to a surviving spouse is entirely conventional here, and can produce an unwelcome US result where that spouse is not American. Lifetime gifting programmes built around one country's survivorship and timing rules may not achieve the intended effect under the other's. Each document is competent; the combination has never been tested end to end.
Nothing here recommends a structure; sound process matters more than a favourite technique. It starts with facts rather than instruments: a schedule of assets with situs and ownership, an accurate UK residence history, and confirmed citizenship status for both spouses. Only then can you map exposure under each system, identify the genuine overlap, and review every will, trust and beneficiary designation against both regimes at once — with UK and US advisers reading the same schedule together.
Our US-UK expat tax practice builds the residence history, maps the estate against both systems and works alongside your UK and US legal advisers so the documents and the tax analysis agree. A licensed CPA or Enrolled Agent reviews and signs off every filing that leaves the firm, and estate planning questions outside our remit stay with your solicitors and attorneys. If you are a US citizen in Britain approaching or past the ten-year mark, book a confidential consultation. For the UK side, our note on inheritance tax planning myths is a useful companion.
This article is general information, not tax, legal or estate planning advice, and does not create a professional relationship. UK and US rules, thresholds and treaty positions change, and the treatment of any estate depends on its own facts; confirm the current position with licensed professionals in both countries before acting.
---
Reviewed by a CPA / Enrolled Agent. Last updated: 12 September 2026.
Official sources: GOV.UK — Inheritance Tax if you're a long-term UK resident | GOV.UK — Inheritance Tax deemed domicile rules before 6 April 2025 | HMRC — IHTM47001, Long-term UK residence test: introduction | HMRC — IHTM47030, Spouse or civil partner exemption: not a long-term UK resident | HMRC — IHTM47038, Spousal long-term UK residence elections | GOV.UK — Inheritance Tax: Double Taxation Relief | IRS — Some nonresidents with U.S. assets must file estate tax returns | IRS — Instructions for Form 706 | IRS — Instructions for Form 706-QDT | IRS — Instructions for Form 709 | IRS — Estate tax