A home in India does not automatically enter a UK inheritance tax estate because its owner has lived in Britain for 10 years. Since 6 April 2025, long-term UK residence has been the main domestic test for bringing overseas assets into scope. But HM Revenue & Customs says the older UK–India estate treaty can still restrict Britain’s taxing rights where the person’s common-law domicile is India.
For a family with property in both countries, those are separate questions. First establish whether the owner is within the residence-based regime. Then examine whether the treaty changes the result on death, which country the person was domiciled in under the relevant law, and how the property passes. Citizenship, an OCI card or the location of a family home cannot answer all of them.
The position described here is the official guidance available on 14 October 2026. It concerns estate planning and the treatment of a deceased owner’s assets. It should not be confused with the income tax or capital gains tax that a beneficiary may face after receiving, letting or selling a property.
What changed in UK inheritance tax from April 2025?
The domestic test for overseas assets changed from domicile and deemed domicile to long-term UK residence on 6 April 2025. HMRC’s long-term residence guidance says overseas assets may be subject to inheritance tax when a long-term UK resident dies or transfers assets.
The change affects people whose assets are spread across countries. An Indian property may therefore require a UK review even when the owner has never transferred it to Britain. Sending the title deeds abroad, keeping rent in an Indian bank account or deciding to retire in India does not, by itself, establish the inheritance tax treatment.
The relevant date matters. A death or transfer before 6 April 2025 falls under the earlier rules. A calculation made for a later event must use the new rules and any applicable transitional provisions. A family should therefore record the date of the event before applying a residence checklist found online.
How does the 10-out-of-20-years residence test work?
The general test asks whether the individual was UK tax resident for at least 10 of the 20 tax years immediately before the tax year of the chargeable event. Ten consecutive years satisfy that requirement, but the years do not have to be consecutive. HMRC’s Inheritance Tax Manual sets out the test and the rules after departure.
Count tax years, rather than anniversaries of moving to Britain. The UK tax year runs from 6 April to 5 April. Annual tax residence is determined under the applicable residence rules, so a year in which someone travelled between India and Britain still requires its own assessment. Visa status and tax residence are different legal classifications.
For example, a person with a series of UK assignments separated by years in India should not assume that only their most recent spell counts. The residence history across the full look-back period is relevant. This is a hypothetical example of how to approach the records, not a finding about any particular family’s tax bill.
What is long-term UK residence?
It is the inheritance-tax status defined by the statutory residence-history test. It is different from being UK tax resident in the current year, and different again from common-law domicile, which can still matter under an estate treaty.
Does leaving Britain immediately remove overseas assets from scope?
No. A person who has become a long-term UK resident can remain within the domestic inheritance tax regime for between three and 10 tax years after becoming non-resident, depending on their earlier residence history. Moving back to India is therefore a reason to review an estate plan, rather than evidence that every UK tax connection has ended.
| UK-resident years in the relevant 20-year history | General period remaining in scope after departure |
|---|---|
| 10 to 13 | Three tax years |
| 14 | Four tax years |
| 15 | Five tax years |
| 20 | 10 tax years |
The table summarises the general rule, not every transitional case. HMRC also sets out provisions for people who were non-resident in 2025–26 and whose domicile or deemed-domicile position on 30 October 2024 meets specified conditions. Previous elections and an interrupted period of non-residence can also require a separate review.
After 10 consecutive tax years of non-residence, the residence test resets under the rules explained by HMRC. A return to Britain should therefore be assessed against the precise sequence of tax years. A short description such as “I left five years ago” does not supply enough information to apply the test.
Why does the UK–India estate treaty still matter?
The treaty matters because it predates the changes that align newer estate treaties with long-term UK residence. HMRC’s guidance on pre-1975 conventions says these conventions operate by reference to common-law domicile. For India, it states that the UK’s taxing rights are restricted to UK assets in the estate where the person’s common-law domicile is India.
That is an exception to treating residence as the complete answer. India abolished estate duty in 1985, but HMRC still lists the UK–India convention as relevant to inheritance tax on death. The absence of an Indian estate-duty bill does not mean the treaty can simply be ignored.
There are qualifications. Article III of the 1956 convention contains wording about property passing under a disposition or devolution regulated by the law of Great Britain. The actual wills, ownership arrangements and succession provisions need review. The location of a flat and a statement that the owner “always regarded India as home” are not substitutes for that analysis.
The convention concerns duties imposed on death. HMRC expressly distinguishes it from lifetime transfers. A family should not carry a conclusion about a deceased person’s Indian home into a separate decision about making gifts, moving assets into a trust or changing the beneficial ownership of a property while alive.
Does an Indian passport prove an Indian domicile?
No. Nationality and common-law domicile are different. HMRC’s domicile reference guidance describes a domicile of choice as requiring both actual residence in a territory and an intention to remain there permanently or indefinitely. A person’s domicile of origin and later circumstances also matter.
That reference guidance should be read for the domicile question that remains relevant to the treaty, rather than used to revive the former domestic inheritance tax regime. A British passport does not settle the question in one direction, and an Indian passport or OCI status does not settle it in the other.
For a cross-border family, the task is to assemble evidence of the person’s life and intentions and obtain a reasoned legal assessment. Where they lived, whether a move was intended to be permanent, and the consistency of their actions may need consideration together. A single document created just before a death is not a reliable substitute for the wider history.
Would inclusion mean a 40% charge on the whole Indian property?
No. Being within scope and owing a particular amount are separate questions. For 2026–27, the standard estate rate is 40% and the ordinary nil-rate band is £325,000. The charge is normally on the taxable value above the available threshold, after applying the relevant rules, rather than 40% of every asset individually.
The current official rates and allowances also list a residence nil-rate band of £175,000, subject to its own conditions and taper. Spouse, civil-partner and charity exemptions, transferable bands and other reliefs can affect a calculation. They should not be assumed without checking eligibility, particularly in a cross-border estate.
An adviser needs the deceased’s ownership share and the value of the relevant assets, together with debts, gifts and the applicable exemptions. A family that owns a property jointly should distinguish the whole building’s value from the interest that belonged to the deceased. Converting a rupee valuation into a UK calculation also requires a consistent valuation date and evidence.
What changes if the home was gifted or held in a trust?
Gifts and trusts need separate analysis because the India convention’s protection on death is not a general exemption for lifetime transfers. HMRC’s gift guidance explains the seven-year rule, exemptions and gifts from which the donor continues to benefit. Merely changing the name on a deed does not establish that a gift has left an estate for every tax purpose.
Trusts can have charges when assets enter, leave or remain in a settlement. The settlor’s residence status, the trust’s terms, the timing of transfers and transitional rules can all be relevant. HMRC’s trust guidance should be considered alongside the post-April 2025 overseas-asset rules.
Do not assume that an old trust permanently protects an Indian property because it was created before the owner became a long-term UK resident. Equally, do not assume that every foreign trust produces the same charge. The trust deed and the actual occasion of charge are necessary to reach a conclusion.
What should an Indian family put in the review file?
Start with the tax-residence history, the title documents and every relevant will or trust deed. The aim is to let the adviser identify the event being assessed, the property actually owned, the domestic residence position and any treaty claim without having to reconstruct them from memory.
List the tax years in which the owner was UK resident, the dates and circumstances of departures and returns, and any earlier domicile or spouse-election advice. Add the property’s location, ownership shares, acquisition history, liabilities and a supported valuation. Records of previous gifts and retained rights to use the property are also relevant.
Keep inheritance tax separate from other financial decisions. A later sale, rent received by a beneficiary or a transfer of proceeds creates different questions. Guidance on sending money between India and overseas can help distinguish transfer costs from tax liabilities; the broader business and personal-finance coverage provides related context.
Who handles the inheritance tax assessment after a death?
The person administering the estate normally handles the inheritance tax process. HMRC’s inheritance tax overview distinguishes the estate’s liability from a beneficiary’s later income tax on rent or capital gains tax on a sale. Receiving an Indian home and selling it are different events, with different records and calculations.
Executors should therefore keep the supported valuation, ownership evidence and legal assessment together. A treaty conclusion needs the domicile analysis and the relevant documents, while a residence conclusion needs the tax-year history. If advisers in both countries are involved, they need consistent versions of the wills and the same description of the asset.
This administrative distinction also affects family discussions. An estimate of a future estate charge is not a demand on every beneficiary today. Before anyone sells assets to meet a presumed bill, establish whether a charge arises, who must account for it and which exemptions or treaty provisions apply.
What should families establish before changing a will?
Establish which country’s law governs each disposition, whether the proposed change affects an estate-treaty position, and whether the document works with the other country’s succession and administration requirements. A will should not be altered on the assumption that one inheritance tax test determines every part of a cross-border estate.
Ask the adviser to explain the domestic residence result and the treaty result separately, including any qualifications. The next useful step is a written assessment based on the actual documents and residence history. That provides a basis for estate planning and for the executors who may later need to support a claim to HMRC.
