United Kingdom.

The United Kingdom imposes inheritance tax (IHT) under the Inheritance Tax Act 1984 at 40% on estate value above the nil-rate band of £325,000, with a residence nil-rate band of £175,000 available for qualifying transfers of the family home to direct descendants. The seven-year rule under section 7 IHTA captures lifetime gifts via the potentially-exempt-transfer (PET) regime. England and Wales operate one common-law system; Scotland a distinct civil-law system under the Succession (Scotland) Act 1964; and Northern Ireland its own variant.

The Finance Act 2025 (in force 6 April 2025) effected a fundamental reform — replacing the long-standing domicile-based IHT regime with a new long-term-resident (LTR) test under sections 267A and 267B IHTA. A person becomes long-term resident after ten of the preceding twenty UK tax years, with worldwide-asset IHT exposure following. The four-year FIG (foreign income and gains) regime under Finance Act 2025 replaces the abolished remittance basis, and the temporary repatriation facility (TRF) creates a 12% rate for prior unremitted gains.

The memoranda in this series address the recurring fact patterns in UK cross-border estate planning — including the post-Finance Act 2025 long-term-resident regime and its impact on Canadian and US clients in the UK, the US-UK 1980 Estate and Gift Tax Treaty Article 5(1) tie-breaker, the spouse exemption restrictions for non-domiciled and non-LTR spouses, business property relief and agricultural property relief under Finance Act 2026 (£1m cap from April 2026), and the Canadian deemed disposition interaction with UK IHT.