UK Inheritance Tax and Probate for Non-UK Domiciled People
Updated: Oct 10
When someone dies, their estate may face UK inheritance tax and probate. The estate means their money, property and other assets. For people who are not domiciled in the UK, the rules can be different and sometimes confusing. This guide explains UK inheritance tax and probate in plain words.
Domicile means the country you treat as your permanent home. Someone who does not live in the UK for good, or does not see it as home, is usually called non-UK domiciled.
What is inheritance tax?
Inheritance tax (IHT) is a tax on the value of a person's estate after they die. In the UK, the usual figures are:
The tax-free allowance, called the nil-rate band, is £325,000.
Anything above this amount is usually taxed at 40%.
For example, say an estate is worth £500,000. Tax is worked out on the amount over £325,000:
£500,000 - £325,000 = £175,000
Tax = 40% of £175,000 = £70,000
These are the standard figures. Other reliefs can apply, so check the current rules on GOV.UK inheritance tax.
Who pays inheritance tax?
Usually the executor or administrator pays. This is the person who manages the assets of the deceased person. The money comes from the estate before anything goes to the beneficiaries.
When must the tax be paid?
Inheritance tax is generally due by the end of the sixth month after the death. After that, interest can be charged. The tax often has to be paid before probate is granted, which can be a problem if the money is tied up in the estate.
The direct payment scheme
Some banks and building societies offer a direct payment scheme. It lets the executor pay the tax straight from the deceased person's account. This can help when you need to pay inheritance tax before you have access to the estate. Ask the bank whether it offers it.
How does domicile affect inheritance tax?
Domicile has long played a big part in how much UK inheritance tax is owed.
UK domiciled people: inheritance tax applies to all your worldwide assets, in the UK and abroad.
Non-UK domiciled people: inheritance tax usually applies only to your UK assets, such as UK property or UK bank accounts.
What is deemed domicile?
Even if you are not truly domiciled in the UK, you could be treated as deemed domiciled for tax. Under the old rules, this happened if:
you lived in the UK for at least 15 of the last 20 years, or
you were domiciled in the UK in the past and came back within the three years before your death.
If you are deemed domiciled, the UK taxes your worldwide assets, like a UK domiciled person.
The rules have changed
The UK government changed this system for deaths on or after 6 April 2025. Broadly, liability for worldwide assets now depends on how long a person has lived in the UK, not on domicile. Because the detail is complex, check the current position on GOV.UK or take advice before you rely on the older tests above.
What about spouses and inheritance tax?
If you leave your estate to a spouse or civil partner, the rules depend on their domicile. A surviving partner who is UK domiciled can usually receive assets with no inheritance tax.
Both spouses domiciled in the UK: no inheritance tax is due when assets pass between spouses.
One spouse non-domiciled: the tax-free transfer is capped at £325,000 under the older rules, unless the non-domiciled spouse chooses to be treated as UK domiciled for inheritance tax.
Spouse rules were also affected by the 2025 changes, so get up-to-date advice if this applies to you.
What is the probate process?
Probate is the legal process of managing and sharing out a person's estate after death. The probate process involves three main steps:
Applying for a Grant of Probate (if there is a will) or Letters of Administration (if there is no will).
Paying any inheritance tax owed.
Distributing the estate to the beneficiaries.
Once probate is granted, the executor can deal with the assets. You can find the official steps on GOV.UK applying for probate.
A non-UK domiciled person may still need probate if they own UK assets. This makes sure the right tax is paid and the assets pass lawfully.
How to reduce inheritance tax
Here are some ways non-UK domiciled people may be able to reduce inheritance tax:
Gifting assets: giving assets away in your lifetime can reduce your estate. If you survive for seven years after a gift, it is usually not counted.
Using exemptions: gifts of up to £3,000 each year are exempt from inheritance tax.
Setting up trusts: placing assets in a trust can help, but the rules are complex.
Life insurance: a policy written to cover the tax bill can stop your heirs having to sell assets.
Why this matters for non-UK domiciled people
Many non-UK domiciled people hold assets in more than one country. Knowing how UK inheritance tax and probate apply to UK assets helps you to:
avoid unexpected tax bills
make sure your estate is shared as you wish
protect your family from legal and money problems
If you also own assets in Turkey, local rules may apply as well. Read our guides to inheritance law in Turkey and whether a UK will is valid in Turkey.
Reduced IHT rate and the home allowance
The standard IHT rate is 40%. A reduced rate of 36% can apply if at least 10% of the net estate is left to charity. There may also be an extra allowance when a main home passes to children or grandchildren. The rules for this are detailed, so check the current figures on GOV.UK.
Which assets count for UK inheritance tax?
For a non-UK domiciled person, the main question is which assets are in the UK. UK property, UK bank accounts and UK investments usually count. Assets held abroad may be outside UK tax, depending on the person's position at death.
Certain assets can attract relief, such as some business or farming property. Pension funds have also been treated in a special way, and the government has announced changes. Always check the latest rules before you plan around them.
Forms and HMRC: what the executor must file
The executor reports the estate to HM Revenue and Customs (HMRC). Many estates need the full account form, IHT400, along with other pages for the assets involved. Some smaller or exempt estates have a simpler process.
IHT400: the main inheritance tax account for the estate.
IHT421: the probate summary that HMRC stamps and returns, so you can apply for probate.
IHT423: the form you complete to authorise a bank or building society to pay tax from the account under the direct payment scheme.
Forms and rules change, so use the current versions from GOV.UK. If the estate is large or has foreign assets, a lawyer can complete the forms and avoid delays.
How to apply for probate
You can usually apply for probate online or by post. You will need the death certificate, the original will if there is one, and the value of the estate. If tax is due, you generally need to pay it, or arrange payment, before the grant is issued.
Once probate is granted, the executor can collect the assets, pay debts and share what is left. Keep clear records of every payment.
The tax year and annual gifts
The UK tax year runs from 6 April to 5 April. The £3,000 annual gift exemption applies each tax year. Gifts made earlier than seven years before death are usually outside the estate. Gifts made within seven years may be taxed on a sliding scale.
Keep a record of every gift, its date and its value. Executors will need this information when they report the estate.
Common mistakes to avoid
Assuming that assets outside the UK are always free of UK tax.
Missing the six-month deadline for paying tax, which can mean interest.
Relying on the old domicile rules for a death after 6 April 2025.
Not keeping records of lifetime gifts.
Leaving the will out of date after a move between countries.
Next steps
Start by listing your assets and where they are. Then check how the current rules treat them. If you have a link with Turkey as well as the UK, take advice in both countries. It is much easier to plan ahead than to fix problems after a death.
How Canko Law Firm can help
At Canko Law Firm, we help non-UK domiciled people with:
Inheritance tax advice: understanding how the rules apply to your UK assets.
Probate help: guiding you through the legal process of dealing with UK assets after a death.
Cross-border work: estates with assets in several countries, particularly the UK and Turkey.
Estate planning: reducing inheritance tax through careful planning and trusts.
Contact us
If you need to know more about UK inheritance tax and probate, contact Canko Law Firm today. We can guide you through the process and give advice tailored to you.
