IHTM42601 | Foreign element: practice

Foreign assets

From 6 April 2025, for inheritance tax purposes, domicile is replaced by long-term UK residence and you can find details of these rules at IHTM47000.

Whether foreign assets in a trust are excluded property depends upon the long-term UK residence status of the settlor, or in some cases, their domicile (see IHTM47050). For qualifying interest in possession settlements (IHTM16061) foreign settled property is only excluded property at times on or after 6 April 2025 if the life tenant is also not a long-term UK resident (IHTM47051).

Long-term UK residence/Domicile

If the taxpayer claims that the trust is exempt or partly exempt because of the long-term UK residence/domicile of the settlor, review the appropriate schedule in the account and refer to IHT Technical as appropriate. (IHTM10685)

The next page gives some details of the impact of not being long-term UK resident or having an overseas domicile. General long-term UK residence details are at the long-term UK residence section of this manual (IHTM47000). General domicile details are at the domicile section of this manual. (IHTM13000)

Avoidance

The use of foreign trusts by individuals who are long-term UK resident (from 6 April 2025) or were domiciled in the UK (before 6 April 2025) may be an indication of avoidance.