Today I learnt, if you retire abroad you're still on the hook for UK inheritance tax for ten years

[Another2Cats]

I'm not too sure if I've just had my head under a rock all this time and this is common knowledge but I was really suprised to find this out.

For context, relatives of mine who are retired have a holiday home in Portugal and they have now decided to sell up in the UK and move to Portugal permanently.

Apparently, in last year's budget the rules were changed so that if you die within ten years of leaving the UK then you still have to pay UK inheritance tax (IHT) on your entire worldwide estate (not just any assets left in the UK).

So, if you've lived your entire life in the UK and then decide at the age of 75 to sell up and move abroad then, if you die before the age of 85, your entire estate is still subject to UK IHT.

Just another thing to have to consider if you're thinking about retiring abroad.

Try being American. Then you have to pay taxes to America even if you work in another country.

True, but again the double taxation treaties apply, so the higher IT rate will be charged on your income when credit is given for tax paid in the other country. Make sure there is a DT agreement in place of course!

To me the whole idea of people who have more than enough trying to avoid their tax liabilities is somewhat distasteful.

If you want to move abroad do so because you want to live there, not to save a bit of tax.

The top % of taxpayers employ clever accountants who devise schemes to enable them to ay as little tax as possible. I would do exactly the same in their position.

Really, why? My husband and I have had the enormous advantage of growing up with the NHS, free state education all the way from early childhood to university level, and many other benefits of the welfare state. Along the way we bought an unremarkable house in London at a time when that was within the grasp of people on ordinary salaries. This is now worth many times what we paid for it and the original (small) mortgage is paid off. We haven't earned this in any way, we were just lucky. In due course our children will inherit this house and either live in it or more likely sell it. As the IHT regulations currently stand, our children can inherit £1m from us (including the house) with no tax to pay at all. That's a small fortune! It's a life-changing amount. Our adult children have done nothing whatsoever to earn this either. Why shouldn't a small part of this windfall go to the Treasure to help future generations? That's certainly what we want and we will take no steps at all to avoid that inheritance tax.

ByQuaintAzureWasp · 28/01/2026 14:42
MangaKanga · 28/01/2026 13:58
How would it be enforced if all their assets were now overseas?

They'd have to inform DWP if they were receiving state pension, otherwise they'd not know

But how would UK tax collectors get their hands on taxes owed if there was no money or assets in UK?
As far as I know UK student debt is not collected if the students leave the country still owing money.

Wouldn't the undeserving children pay CGT when they sell the house?

No they don't - I've just looked it up - so they are sitting on a million + free gift - no wonder you are feeling generous.

I think not if they sell it as part of the process of getting probate, but I am not a lawyer or tax expert, so open to correction on this. If they lived in it as their principal private residence first and then sold it (not impossible as they are both single to date) I don't think any CGT would be payable either.

(They're not undeserving, btw. We love them very much and it's a wonderful privilege to be able to leave them something. They just haven't earned it in the way that, say, children working in the family business would have earned part of its value.)

This is a legal forum. not tea leaf reading.

You rather forgot to include your legal opinion.

‘regular families hit hard by soaring home prices’

oh noes poor them

incredible phrasing

amd I say that as a family ‘hit’ similarly hard

As usual the rich trying to defend the reason why they don't want to pay their share. If you don't want to pay IHT spend the money, or maybe give some to charity.

Not if you renounce your UK citizenship.

At last! Someone with a social conscience. I'm in very much the same situation and as I've brought up my adult DC with similar set of values they are more than happy to pay tax on money they'll inherit. It's unearned income for which they'll be very grateful

It used to be 17 years under the deemed domicile rules! 10 is an improvement.

So for dual nationals This would be quite easy?

£1m isn’t a life changing amount. Unfortunately. It is a ‘making life easier’ amount.

Very very few do this. Most ppl in this category just pay the tax.

Why shouldn’t they pay tax just like everyone else?

Well if some/all of the estate consists of UK property, the Land Registry will have records of the sale of properties and the seller, so can trace the seller's tax records and hence follow through to the estate of the deceased. Obviously not so easy with other kinds of assets such as foreign property, artworks, yachts etc.

Your main residence relief is still time apportioned and only exempt from CGT for the time you owned and lived in it as your main residence. The period of time when it wasn't your main residence will still be liable to CGT on a pro-rata time basis. Just living in a house as your "home" for a short period of time doesn't make it exempt if there are longer periods when it wasn't your "home".

Cutting IHT will reduce the available funding for healthcare.

So I guess it's a toss up - be more likely to die but pay less IHT, or less likely to die but pay more IHT.

If they sell and move abroad they won’t be able to do this @Badbadbunny

More likely a notification to dwp to stop the state pension will start the wheels in motion.
How they’ll contact the beneficiaries and the cost of tracing them seems confused and expensive though.

Bizarre. They aren’t utilising UK benefits etc - why should they pay tax. They probably have contributed throughout their time here.

That's old and bollocks:

In total, there were 31,500 taxpaying IHT estates in 22-23, meaning 4.62% of UK deaths resulted in an inheritance tax charge during the year, an increase of 0.23 percentage points since the previous year.

The IHT margins are not keeping up with the rise in property prices. Many of the older generation are assest rich and cash poor. It's only going to keep rising.

£500k is not a huge estate if it includes a house in the south of England. It might literaly be a small 2 bed (yes, really!) and a cash poor estate.