Initially proposed in the Spring Budget of 2024, the shift was confirmed in last year’s Autumn Budget, with the aim of simplifying the tax system whilst closing any loopholes related to the concept of domicile – which had long been a source of complexity and contention. Notably, those who cease UK residency will still need to pay IHT on their worldwide assets for between three to ten years after leaving, depending on how long they resided in the country before that.
The founder of My Probate Partner. Mike Davis believes these reforms will have significant impact on estate planning – particularly for non-domiciled individuals and those with assets in trusts. Indeed, removing domicile as a determining factor for IHT liability means a thorough review of existing estate structures to ensure compliance and tax efficiency under the new rules – heightening the need for expert guidance. Below Mike answers all your questions as to how you may be impacted by these changes.
How will this affect probate?
In addition to impacting estate planning, however, the new IHT rules will also have significant implications for those handling probate (known as ‘Confirmation’ in Scotland). Under the old system, IHT was only paid on the UK-based assets held by non-domiciled people. However, from April 2025 onwards, long-term residents – defined as those who have paid UK taxes for at least ten out of the previous 20 years – will see IHT applied to any assets held outside of the UK, regardless of where these are worldwide. Any property, investments, money and personal belongings abroad will be affected, factoring into the 40% IHT calculations due upon death, regardless of previous non-domicile status.
Trusts and additional tax liabilities
Trusts, traditionally used to shield overseas assets from IHT in the UK, will likewise be affected. Indeed, these protections will be weakened significantly under the new law, whereby if a settlor – someone who establishes a trust – later qualifies as a long-term UK resident, the assets held within their trust will now see IHT applied. Moreover, these assets will fall under the ‘relevant property regime,’ meaning that up to 6% tax can be requested under the ten-year anniversary charge, in addition to any exit charges that will be made when assets are withdrawn.
This is a major shake-up for long-term residents with international assets, forcing them to reassess estate planning to avoid unexpected tax bills. For Scots with cross-border estates, the complexities of tax exposure will require even further consideration, particularly where existing trusts are involved.
What this means for probate
For executors handling probate/Confirmation, the changes mean that overseas assets will need to be accounted for in estate valuations, alongside UK-based assets. This makes the process significantly more complex, particularly given how critical it is that all IHT liabilities have been calculated correctly. Errors will only result in Grant of Confirmation applications being rejected, delaying estate distribution and preventing friends and family from moving on.
Given the additional complexities, many executors will consider hiring a solicitor, even when legal involvement is not necessary. Indeed, in Scotland, solicitor involvement is only required if the estate is valued at more than £250,000 and no Will exists. As long as the Will is clear and uncontested, executors can typically approach the probate process alone.
That said, the risks and anxieties surrounding DIY probate must be recognised, despite the fact that working with a solicitor can be both frustratingly slow and costly. Fees usually range between £3500 and £10,000– and when caseloads are high, delays can stretch for up to a year.
Non-solicitor probate services can provide an efficient, cost-effective alternative for those who want expert guidance, without full solicitor fees or a long wait. These specialists support executors throughout the process, ensuring that applications are accurate and filed quickly, reducing the risk of rejection and allowing the estate to be distributed faster. This strikes a balance between affordability and assistance, particularly for those lacking confidence or emotional capacity to manage probate alone.
A considered approach to IHT and probate
The transition to residency-based IHT is significant, especially for those with assets abroad. As probate becomes more complex, individuals must plan ahead to avoid complications, with people in Scotland advised to seek professional guidance to help them avoid both risks and high solicitors’ costs.