For decades, British expats relied on one comforting idea about inheritance tax: if you lived abroad long enough and shed your UK domicile, your overseas wealth fell outside UK inheritance tax. That approach is now changing. From 6 April 2025, the UK began replacing the old domicile-based approach with a residence-based test, shifting the key question towards how long you have been a UK resident rather than where you are domiciled. The detail sits in legislation that continues to bed in, and transitional protections apply to some existing arrangements, so the picture is more nuanced than a simple before-and-after. This guide explains how UK inheritance tax now works in broad terms for British nationals living in the UAE, what tends to be in scope, and the planning points that matter most. It is a starting point for understanding your position, not personal advice, and your own position should be confirmed with regulated advice.
This is the change that catches most expats by surprise. From 6 April 2025, the UK is moving away from domicile as the main test for inheritance tax and towards a residence-based approach. The primary test for whether your worldwide estate falls within UK inheritance tax is now whether you are a long-term resident, currently defined as having been UK tax resident for at least 10 of the previous 20 tax years. The detail is set by legislation that is still bedding in, and domicile has not vanished entirely; it can still be relevant in places, particularly for existing trusts and certain transitional cases. If you built your estate plan around being non-domiciled, the most important step is to have it reviewed against the new rules rather than assume it still works as intended.
Living in the UAE does not usually take your UK assets outside UK inheritance tax. UK situated property, most importantly a house you still own, whether a former home now let out or a buy-to-let, generally stays within the UK inheritance tax net regardless of your residence status or how long you have been away. This is the most common and most overlooked exposure for UAE-based expats, because the asset feels distant but the tax treatment has not moved with you. Exactly how a particular asset is treated can depend on its type and how it is held, so it is worth confirming rather than assuming.
Even once you stop being a long-term resident, your worldwide estate does not necessarily fall out of scope straight away. Under the current rules there is a tail of continued exposure, broadly lasting between three and ten years depending on how long you were resident, with a longer period for those who were resident for many years. Transitional provisions can also apply to people who left before the new rules took effect. The general point holds: a recent move to the UAE does not switch off worldwide inheritance tax exposure on its own, and the exact length of any tail in your case should be checked.
Unused defined contribution pension pots are scheduled to fall within the scope of UK inheritance tax from 6 April 2027. For expats who have consolidated significant savings into a SIPP, this is a meaningful change, because a pot that was previously outside the estate may soon form part of it. It also means pension decisions and estate planning can no longer be handled in separate boxes. Our guides on UK pension options and pension transfers cover the pension side of this in more detail.
Inheritance tax is charged at 40% on the value of an estate above the available allowances. Everyone has a nil-rate band of £325,000, and up to a further £175,000 residence nil-rate band where a main home passes to direct descendants. Both are frozen until April 2030, which quietly pulls more estates into charge each year as asset values rise. Transfers between spouses or civil partners are generally exempt, and a spouse who is not a long-term resident can elect to be treated as one so that the exemption applies.
The most expensive mistake under the changing rules is acting on the old ones. The protection that non-domiciled status used to give overseas assets has been significantly curtailed from 6 April 2025, and the balance has shifted towards residence. Advice or a structure built under the old domicile system should not be assumed to still achieve the same result, though some existing arrangements may benefit from transitional protections. The safe step is a review rather than an assumption either way.
Many expats keep a UK property after moving to the UAE, often a former home that is now let out, and assume that living abroad shelters it. Usually it does not. UK situated assets generally remain within UK inheritance tax whatever your residence status, so a UK property is in most cases part of your exposure and should be planned for directly rather than overlooked.
Leaving the UK is not an instant exit from worldwide inheritance tax exposure. The three to ten year tail means a long-term resident remains in scope for years after departure. Planning that assumes exposure ends on the day you board the plane can leave an estate caught during the very period the family assumed it was safe.
With unused pensions due to count toward the estate from April 2027, treating the pension decision and the estate plan as two unrelated exercises no longer works. A large SIPP that improves your retirement flexibility can also increase your inheritance tax exposure, and the two need to be looked at together rather than in isolation.
Cross-border estates can be governed by more than one country's succession rules, and the UAE applies its own, which interact with local and Sharia principles in ways that continue to evolve. Without properly drafted, coordinated wills, an estate can be distributed in ways the family never intended, and the resulting delays and disputes can be costly. Options such as a DIFC or Abu Dhabi will are often used by expats for UAE assets, but the frameworks and local practice change over time, so these should be set up with local legal advice to confirm current requirements, subject to any future changes to UAE succession frameworks. A will that works in one country is not automatically effective in the other.
Clarity Global Wealth helps British expats in the UAE understand and plan for UK inheritance tax under the residence-based rules that took effect in 2025. We start by establishing where you actually stand: whether you are a long-term resident, how long any tail of exposure runs, which of your assets are in scope, and how your pensions and property fit into the overall picture. From there we look at the planning options that genuinely fit your situation, from making use of allowances and spousal exemptions to gifting, trust and insurance-based structures, and coordinated cross-border wills. Because inheritance tax interacts with pensions, investments and succession law across more than one country, we coordinate with regulated firms in each relevant jurisdiction so the advice you act on is appropriate and compliant wherever your assets and your family are. The aim is a clear, current plan rather than one built on rules that no longer apply.
This guide is provided for general information only and reflects our understanding of the rules as at the date of publication. It is not personal financial, investment, pension or tax advice, and should not be relied upon as such. Rules and tax treatment can change and depend on your individual circumstances and country of residence. You should always seek regulated advice specific to your situation before taking action.
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