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Understanding IHT Reform
The IHT system will transition to a residence-based model, impacting individuals who have been UK tax residents for a minimum of ten years. This change will bring more individuals into the IHT net sooner than they had planned.
Safeguards Against Tax Avoidance
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Inheritance Tax Reform 2025: What You Need to Know
Understanding IHT Reform
The UK’s Inheritance Tax (IHT) system will undergo a significant transformation in 2025, shifting to a residence-based model. Under the new framework, individuals who have been UK tax residents for a minimum of ten years will fall within the scope of IHT, regardless of their domicile status.
This change will bring more individuals into the IHT system sooner than they may have anticipated, making it essential to reassess existing estate planning strategies. Those with international assets or offshore structures should take a proactive approach to ensure they are prepared for these new rules.
Safeguards Against Tax Avoidance
To strengthen the integrity of the new IHT framework, the government is introducing safeguards to prevent tax avoidance. A key measure targets Excluded Property Trusts, which have historically enabled non-domiciled individuals to keep certain assets outside the UK IHT scope.
With these changes, offshore tax planning will face increased scrutiny, meaning individuals with such arrangements should review their structures to ensure they remain compliant and do not risk unexpected tax liabilities.
Planning Considerations for Affected Individuals
Given the evolving IHT landscape, careful planning is essential. Consider the following:
✔️ Reviewing estate and succession plans in light of the new residence-based system.
✔️ Assessing the impact on existing Excluded Property Trusts and other offshore structures.
✔️ Seeking expert advice to explore alternative planning opportunities that remain effective under the new rules.
At Sandstone Tax, we provide tailored guidance on offshore tax strategy and estate planning, ensuring our clients remain compliant while safeguarding their wealth for future generations.
Contact us today to discuss how these reforms may affect you and how we can help you navigate the changes with confidence.
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