07/09/2025
New rules, new tools: why British expats should rethink succession andtax planning now.
Sweeping changes to the UK inheritance tax (IHT) regime have reshapedthe landscape for British expatriates. From April 2025, the UK moved froma domicile-based system to one based on long-term residency.
For many expats who believed they had “escaped” the UK tax net, this shiftcould trigger an unexpected clawback of wealth – especially on pensions, property, and succession plans.
But with risk comes opportunity.
With the right combination of pension structuring and offshore planning, British expats can still protect family wealth, not just from unnecessary taxation, but also from the cross-border complexity that can erodelegacies and limit flexibility.
At the core of this opportunity lies the strategic use of SIPPs (Self-Invested Personal Pensions), QNUPS (Qualifying Non-UK Pension Schemes), and offshore trusts. These tools are no longer reserved for the ultra-wealthy, they’re increasingly relevant for any UK national abroad with UK-based assets or UK-resident beneficiaries.
The Scale of the Challenge.
UK nationals overseas still hold a significant amount of UK wealth – over £650 billion in residential property and £66 billion in ISAs alone. Add pensions and share portfolios, and the exposure becomes clear. Left unmanaged, UK income tax, capital gains tax, and now inheritance tax can create a tax drag of up to 90% in some estates. The comfort once provided by domicile-based exemptions is disappearing fast. It’s no longer about where you were born, but where you’ve lived for the past 10 years, and importantly how HMRC interprets your ties to the UK.
So, what Can Be Done?
Two forward-thinking strategies are gaining traction with expatriates in Portugal and Spain:
Naming a QNUPS as Your SIPP Beneficiary
Experienced Advisers are increasingly recommending that SIPP death benefits be directed to a Guernsey-based QNUPS. Benefits include:
• IHT protection: assets are kept outside the estate
• Income tax efficiency: no UK tax if both parties are non-resident
• Succession control: avoids the UK’s relevant property regime
Paying SIPP Benefits into an Offshore Trust
Alternatively, some clients are opting for offshore discretionary trusts:
• Keeps benefits outside the IHT net
• Provides greater control over how and when assets are distributed
• Ideal for multi-generational planning and privacy
• Act Early, Act Strategically
Sadly, these are not one-size-fits-all solutions. Every UK expat’s financial position is unique, but one thing is certain: the rules have changed, and so must the planning.
Now is the time to review your structures and speak to an experienced advisor.
