Tax planning for a wealthy family is not a search for ways to pay less. It is a sequence of decisions: first the tax status of each family member is established, then the structure through which assets are held, and only then the order in which wealth passes to the next generation. Since 6 April 2025 that sequence has changed at its foundation — the length of UK tax residence has taken the place domicile used to hold.
Key takeaways
- Domicile no longer determines either tax on foreign income or inheritance tax — the length of UK tax residence does.
- New residents who have not been UK resident for 10 consecutive years may pay no UK tax on foreign income and gains for their first four years.
- Long-term resident status arises after 10 years of residence out of the previous 20 and extends inheritance tax to worldwide assets.
- The inheritance tax threshold is £325,000, with a further £175,000 for a home passing to children; both are frozen until 2030 to 2031.
- From 6 April 2026 agricultural and business property relief applies within a £2.5m allowance per person, with 50% relief above it.
- From 6 April 2027 unused pension funds will form part of the estate for inheritance tax purposes.
- Planning is best started before arrival in the UK, or before the fourth year of residence ends, as some options close after that.
What tax planning for a wealthy family consists of
A wealthy family is almost never inside a single tax system. One spouse works in London, the other keeps a business in the country of origin, the children attend a British school, property is spread across two or three jurisdictions, and part of the capital sits in offshore structures set up long before the move. Each of these elements carries its own tax consequences, and they do not add up to a sensible whole on their own.
Work therefore begins with facts rather than with tax. It must be established which family members are UK tax resident and from what date, how many complete tax years each has already spent in the country, who owns each asset legally rather than in practice, and which obligations have already arisen but have not yet been reported. Only then is it worth discussing what should change.
The plan then breaks into four strands that need to be reconciled with one another: current taxation of income and gains, inheritance tax and the transfer of assets, the ownership structure itself (personal ownership, a company, a partnership, a trust) and reporting to HMRC. A decision that helps in one strand often worsens another — moving assets into a structure may reduce inheritance tax while creating periodic charges and registration duties. This is why tax optimisation considered in isolation rarely produces a durable result.
Finally, no plan is ever final. Thresholds and rates change, children become taxpayers in their own right, assets are bought and sold, and the length of residence keeps growing until at some point it moves the family into a different category. An annual review is not a formality but the way to notice in good time that an earlier decision has stopped working.
What changed in UK taxation on 6 April 2025
Before 6 April 2025 the extent of a person’s UK tax obligations depended largely on domicile — a complex concept tied to a person’s permanent attachment to one country or another. A non-domiciled individual could use the remittance basis for years and pay UK tax only on the part of foreign income actually brought into the country. For inheritance tax there was a separate concept of deemed domicile.
Both concepts have been removed from the calculation. The remittance basis has been abolished and replaced by a four-year regime for foreign income and gains — the FIG regime. Deemed domicile for inheritance tax has been replaced by the long-term UK residence test. Both new structures rest on the same measurable figure: the number of tax years spent as a resident.
| Question | Before 6 April 2025 | Now |
|---|---|---|
| What sets the extent of taxation | Domicile and deemed domicile | Length of UK tax residence |
| Foreign income of a new resident | Remittance basis, tax only on amounts brought in | FIG regime: no UK tax on foreign income for the first 4 years of residence |
| Condition for the relief | Non-domiciled status, with a charge for long-term use of the basis | At least 10 consecutive years outside UK tax residence before arrival |
| Inheritance tax on foreign assets | Deemed domicile — generally 15 of the previous 20 years of residence | Long-term resident status — 10 years out of the previous 20 |
| Pre-existing wealth held abroad | Taxed at ordinary rates when brought into the UK | Temporary repatriation facility: 12% for 2025 to 2026 and 2026 to 2027, 15% for 2027 to 2028 |
The practical point of this table is that a family’s tax position can now be worked out in advance and fairly precisely. The first year of residence is a known date, the sequence of years that follows is predictable, and so both critical points are known as well: the end of the fourth year and the tenth year of residence. Planning is built around them.
The FIG regime: four years without UK tax on foreign income
The FIG regime is available to a person who became UK tax resident after at least ten consecutive years outside UK tax residence and who is still within the first four years of residence. Where that condition is met, foreign income and gains for the relevant year may be relieved from UK tax regardless of whether those amounts are brought into the United Kingdom.
The regime does not apply automatically. A claim is made in the Self Assessment tax return for the particular year, and it can be limited to selected sources — relief may be claimed on some foreign income and the rest left within ordinary taxation. This is an important difference from the former remittance basis, where the choice was closer to all or nothing.
The relief comes at the cost of personal allowances. For any year in which the FIG regime is claimed, the individual loses the income tax personal allowance and the capital gains tax annual exempt amount, along with married couple’s allowance, marriage allowance and blind person’s allowance where those would otherwise have been due. A claim is therefore a calculation rather than an automatic choice: where foreign income is modest and UK income substantial, it is often better not to claim at all.
Wealth accumulated before 6 April 2025 by former users of the remittance basis is a separate subject. A temporary facility applies to it: amounts designated in a return are charged at 12% for the 2025 to 2026 and 2026 to 2027 tax years and 15% for 2027 to 2028. After that, bringing such amounts into the country returns to the ordinary rules. The mechanics of the regime itself are set out on the UK FIG regime page, and how residence is determined in the first place is covered in the UK tax residence test material.
The key conclusion for a family preparing to relocate is that the four-year window starts running from the first year of residence, not from the moment someone gets to grips with the rules. Sales of foreign assets, dividend payments, reorganisation of structures and crystallisation of gains are all sensibly planned inside that window.
Advantages of seeking tax planning advice from Imperial & Legal
- Calculation of tax status for each family member separately
- Assessment of the benefit of a FIG claim year by year
- Review of the asset ownership structure before relocation
- Preparation and timely submission of tax returns
- Support with HMRC correspondence and enquiries
- Alignment of UK rules with the taxes of other countries
- Annual review of the plan as the rules change
Inheritance tax and the long-term residence test
Inheritance tax is the part of the plan where a mistake costs the most, because by the time it needs correcting there is usually nobody left to correct it. The standard rate is 40% and applies to the part of the estate above the available thresholds. Where at least 10% of the net value of the estate passes to charity under the will, the rate falls to 36%. Transfers to a spouse or civil partner are exempt.
The thresholds are fixed and not index-linked. The main nil-rate band is £325,000 and has not changed since the 2009 to 2010 tax year. The residence nil-rate band for a home passing to children or grandchildren is £175,000, and it is reduced where the estate exceeds £2m. Both are frozen until the 2030 to 2031 tax year. Any unused portion transfers to the surviving spouse, so a married couple may have up to £1m of nil-rate bands between them where the conditions on the home are met.
| Item | Figure | Comment |
|---|---|---|
| Standard rate | 40% | On value above the available thresholds |
| Reduced rate | 36% | Where at least 10% of the net estate passes to charity |
| Nil-rate band | £325,000 | Fixed until 2030 to 2031 |
| Residence nil-rate band | £175,000 | For a home passing to children or grandchildren |
| Taper threshold | £2m | Above this the residence band is reduced |
| Transfers to a spouse | Exempt | Unused thresholds are transferable |
The main question for a family with international assets is whether assets outside the United Kingdom fall within UK inheritance tax. Since 6 April 2025 the answer depends on long-term resident status, which arises where a person has been UK tax resident either for the previous ten consecutive years or for a total of ten years or more out of the previous twenty. From that point inheritance tax reaches assets anywhere in the world, not only those situated in the UK.
The status does not disappear the moment a person leaves. A tail follows it: three years for between ten and thirteen years of residence, four years at fourteen years, five years at fifteen, and rising to as much as ten years. The ten-out-of-twenty count is reset in full only after ten consecutive years of non-residence. The practical conclusion is that a decision to leave the UK needs a tax calculation of its own, not only a logistical one.
Two forthcoming changes are worth taking into account now. From 6 April 2026 agricultural and business property relief operates within a 100% relief allowance of £2.5m per estate, with 50% relief applying to qualifying value above the allowance; the allowance is transferable between spouses. From 6 April 2027 unused pension funds and most pension death benefits will form part of the estate, with the exemption for transfers to a surviving spouse maintained; personal representatives will be liable to report and pay. A fuller treatment is on the wills and inheritance tax page.
What to check in the family wealth structure before relocating
- The start date of UK tax residence for each family member
- Compliance with the ten-year non-residence condition for FIG
- The legal owner of each significant asset, not the practical one
- Existence and current status of structures created before arrival
- Composition of wealth accumulated before 6 April 2025
- Validity of wills in every jurisdiction where assets are held
- Pension funds and how they pass on after 2027
Lifetime gifts and the seven-year rule
Passing assets on during a lifetime is the most direct way to reduce a future inheritance tax bill, but it works only where the timing holds. The general rule is that if the donor dies within seven years of making a gift, the gift may be brought into the inheritance tax calculation. After seven years it falls out of the calculation entirely.
Within the seven-year period, relief applies by reference to the years elapsed. A gift made less than three years before death is taken into account at the full 40%. After that the rate falls, and that reduction is worth planning for deliberately.
| Years between gift and death | Rate of tax on the gift |
|---|---|
| Less than 3 years | 40% |
| 3 to 4 years | 32% |
| 4 to 5 years | 24% |
| 5 to 6 years | 16% |
| 6 to 7 years | 8% |
| 7 years or more | 0% |
Alongside the seven-year rule there are exemptions that require no waiting at all. The annual exemption is £3,000 and may be carried forward, but only for one tax year. Small gifts of up to £250 to one person in a tax year are exempt where no other exemption has been used for that person. Wedding and civil partnership gifts are exempt up to £5,000 for a child, £2,500 for a grandchild or great-grandchild and £1,000 for anyone else. Regular payments out of normal income — school fees or rent, for example — are exempt separately, provided they genuinely come out of income and do not reduce the donor’s usual standard of living. The full conditions are set out in the GOV.UK guidance on gifts.
For a wealthy family the practical value of these exemptions lies not in the individual amounts but in their regularity. A gifting programme designed to run over ten or fifteen years, supported by records of the source of funds and of the fact that payments were made out of income, moves substantial value to the next generation without waiting seven years for each individual transfer.
Trusts and structuring family wealth
A trust remains a working instrument, but since the reform it has stopped being a universal answer. An offshore trust settled by a non-domiciled individual used to keep foreign assets reliably outside UK inheritance tax. That protection no longer applies to assets added to a trust while the settlor was a long-term resident; broadly, it survives for property placed in trust before that status arose and kept outside the United Kingdom.
Trusts also have tax mechanics of their own that need to be calculated separately. A transfer into a discretionary trust above the available nil-rate band is charged at 20% where the trustees pay the tax. The trust property then falls within the relevant property regime: charges arise on each ten-year anniversary, and taking property out of the trust gives rise to an exit charge of up to 6%. Certain trusts — bare trusts and trusts for disabled beneficiaries among them — sit outside that regime.
The practical conclusion is straightforward. A trust earns its place where control over an asset, protection against division on divorce or inheritance, and management of the interests of several generations at once are what matter. Where the aim is limited to reducing inheritance tax, the cost of running the structure and its periodic charges not infrequently outweigh the benefit. The alternatives are examined on the succession planning and family business restructuring pages.
Tax planning
How a plan for your family begins
Status diagnostics
Residence and time periods calculated for each family member.
Asset review
Ownership structure and pre-arrival structures examined.
Wealth transfer plan
Wills, a gifting programme and an assessment of whether a trust fits.
Reporting and support
Tax returns, HMRC correspondence and an annual review.
Income tax and the Self Assessment tax return
While the long-term structure is being built, the family goes on paying ordinary UK taxes, and this is where mistakes happen most often — simply because the deadlines come round every year. For the 2026 to 2027 tax year the personal allowance is £12,570. It is reduced by £1 for every £2 of income above £100,000 and disappears entirely at £125,140, which creates a band where the effective rate is materially higher than the headline one.
| Band | Taxable income, 2026 to 2027 | Rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
These rates apply in England, Wales and Northern Ireland; Scotland has its own bands. For capital gains tax in 2026 to 2027 the rates are 18% within the basic rate band and 24% above it, and the annual exempt amount is £3,000. Trustees and personal representatives pay 24%.
The deadlines for the 2025 to 2026 tax year run as follows: tell HMRC that a return is needed by 5 October, paper returns by 31 October 2026, online returns by 31 January 2027, and payment of the tax due also by 31 January 2027. Where payments on account apply, the second instalment falls on 31 July. Missing any of these dates triggers penalties, which arise whether or not tax was in fact underpaid. The practical side of preparation is covered on the Self Assessment tax return page.
For a family with assets in several countries there is a further task: reconciling the UK return with foreign ones. The same income may enter the calculation in two jurisdictions, and relieving the double charge requires both the correct application of treaties and matching figures in both returns. A discrepancy between them is a common trigger for enquiries from tax authorities.
Reclaiming overpaid tax: when it is possible
Overpayment happens more often than one might expect, and in wealthy families for entirely ordinary reasons. The UK system withholds tax at source through a tax code, and a code does not always reflect the real shape of a year’s income.
Grounds for a refund that come up regularly:
- an incorrect or emergency tax code applied after a change of job;
- more than one source of employment income at the same time;
- employment ending mid-year, with deductions calculated for a full year;
- expenses or reliefs that were available but never claimed;
- a capital loss not set against gains realised in the same year.
Married couple’s allowance deserves a separate mention. It is available where one spouse or civil partner was born before 6 April 1935, and it reduces the final tax bill by between £436 and £1,127 a year. One detail matters for new residents: the allowance is not available for any year in which the FIG regime is claimed. It is a relief in its own right rather than a ground for reclaiming an overpayment — the earlier version of this page merged the two, and confusing them leads to misplaced expectations.
A refund claim is best prepared alongside the whole picture of the year rather than on its own: setting off losses, allocating income between spouses and deciding on a FIG claim are all connected, and a gain on one point sometimes turns into a loss on another.
Cost and timescales: what drives the volume of work
The cost of tax planning depends not on the size of the capital but on the number of jurisdictions, structures and people that have to be taken into account. A couple with UK employment income and one foreign account is a matter of a few hours. A family with businesses in two countries, a trust settled fifteen years ago and heirs of differing tax status is a project running over several months, with specialists involved in each jurisdiction.
| Stage of work | Typical timescale | What affects it |
|---|---|---|
| Initial consultation and assessment | 1 to 2 weeks | Completeness of the documents provided |
| Review of assets and structures | 3 to 6 weeks | Number of jurisdictions and age of the structures |
| Preparation of the plan and recommendations | 2 to 4 weeks | Number of family members and options |
| Implementation of decisions | From 1 month | Registrations, banks, advisers abroad |
| Annual support and tax returns | Annually | HMRC deadlines and changes in the rules |
A precise quotation is produced after the initial assessment, once the real volume is clear: how many assets require verification of title, whether opinions from advisers in other countries are needed, and whether anything remains open from earlier years. The timescales in the table are typical guides; they are subject to how quickly third parties respond and to processing times at government bodies, which the company does not control.
How long-term tax support for a family is organised
- A single picture of assets and liabilities in one document
- A calendar of tax deadlines for the year ahead
- Review of the plan when rates and thresholds change
- Preparation of the next generation for their own reporting
- Coordination with advisers in other jurisdictions
- Retention of records evidencing the source of funds
- Review of wills whenever the asset mix changes
Five stages of work on a tax plan
The sequence below describes the full path a family takes, from the first conversation to the point where the plan is kept current year after year. Each stage ends in a specific result that can be checked.
Consultation and determination of tax status
Review of assets and ownership structure
Preparation of the plan and agreement on decisions
Implementation of decisions and documentation
Reporting and annual review of the plan
Practical examples of tax planning
The three situations below are drawn from typical enquiries and show how the same rules produce different outcomes depending on timing.
A family relocating to the UK for the first time. The couple have not been UK resident for more than ten years, and they hold a business in their country of origin and an investment portfolio. Planning is built around the four-year window: the sale of part of the portfolio and the payment of accumulated dividends fall in the first years of residence, while the FIG regime is available, and the decision on how to hold the business is taken before the fourth year ends.
A family that has lived in the country for nine years. One year remains before long-term resident status arises, and this is the last point at which foreign assets are still outside the UK inheritance tax calculation. Transferring part of the estate and updating wills are considered, with each step tested against the seven-year rule on gifts.
A family planning to leave the UK. After fifteen years of residence, long-term resident status will persist for a further five years after departure. The plan takes that period into account: the sale of UK property, the order of pension withdrawals and the updating of wills are all calculated across the whole tail rather than to the date of the flight.
Behind each of these scenarios sit real enquiries — below are several client stories whose circumstances come closest to those described.
Client stories on tax planning
Tax planning for married couple relocating to UK
Madina and Yuri are a married couple from Kazakhstan. They relocated to the United Kingdom a year ago when Yuri was invited to join a project to develop educational computer games. He agreed right...
Tax planning for a foreign person when moving and buying a property in England
Pablo is originally from South America. He has been living in Britain for several years. His business involves supplying construction equipment to...
Tax planning in England for a client with an investor visa
Andy is a long-standing client of Imperial & Legal. We helped him to obtain a UK investor visa and settle in London. He is originally from South Africa, but he changes locations quite often to...
Tax planning for married couple moving to England to settle (Indefinite Leave to Remain)
Tobias and Hannah moved to the UK from Austria. The couple received a pre-settled status, which is granted to EU citizens, permitting them to relocate...
Tax Returns for Client Who Applies for Indefinite Leave to Remain
Anna relocated to the United Kingdom from New Zealand. She had been happy there with her husband Frederik. He had had a successful automobile business....
English tax return for a client with an Innovator visa
Santiago came to the UK from Costa Rica. We knew him from when he applied for his Innovator's visa to the UK. Imperial & Legal helped him to put together the necessary documents and...
One client described what she had found hardest about relocating — not the change of country itself, but the payments arriving from clients in different jurisdictions.
When my husband got an interesting job offer from the UK, we immediately decided to relocate. I run an online business and can work from anywhere in the world. However, I understood that it was not so easy since I received payments from different countries and feared that I might get into trouble with tax authorities. That’s why, I decided to contact Imperial & Legal’s specialists who helped me do everything right.
Common mistakes made by wealthy families
Most of the problems families bring to advisers arise not from the complexity of the rules but from a handful of recurring decisions taken too late or without calculation.
- The move is arranged before tax status is calculated, and the four-year window is spent for nothing.
- The old logic of domicile is carried over to the new rules, although the concept has been removed.
- An offshore structure is kept out of habit after it has stopped protecting against inheritance tax.
- A gifting programme starts without records of the source of funds or of payments out of income.
- Wills are drawn up in one jurisdiction only, while the assets sit in three.
- Pension funds are left out of the plan, although from 2027 they form part of the estate.
- UK and foreign returns are prepared by different advisers without reconciling the figures.
All these situations have one thing in common: each of them can be put right, but the options narrow with every tax year that passes. That is precisely why a conversation about a tax plan is best started before relocating rather than after the first tax return.
Since the 2025 reform the UK tax system has become more predictable: in place of the contested concept of domicile sits a period of residence that can be counted. But predictability cuts both ways — the deadlines arrive exactly as reliably as they can be calculated. Four years of the FIG regime, seven years on gifts, ten years to long-term resident status and up to ten years of tail after departure form the frame around which a plan is built.
For a family this means that tax planning has stopped being a one-off exercise and has become part of an annual cycle: recalculate statuses once a year, check that the structure still fits, update the documents, and make sure the next generation is ready to receive the capital together with the obligations attached to it. Below are answers to the questions asked most often at a first consultation.
