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UK Inheritance Tax Changes in 2027: What Expats with Pension-Held Property Need to Know

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If you’re a UK national living abroad with pensions—particularly SIPP or SSAS pensions that include commercial property—there are two major tax changes that could significantly impact your estate plans.
 
From 6 April 2025, the UK will scrap the concept of domicile for tax purposes, replacing it with a residence-based system. Then, from 6 April 2027, unspent UK pension assets will be brought fully into the inheritance tax (IHT) net.
 
At Private Client Consultancy, we work with internationally mobile clients—particularly those based in Spain, the EU, Switzerland, and the US—to protect and preserve their wealth across borders.
 
These reforms are not just theoretical; they require urgent attention and expert cross-border advice.

A New Framework: Residence Replaces Domicile in 2025

Previously, many expats have relied on their non-UK domicile status to minimise or avoid IHT on foreign assets. But as from April 2025, this strategy no longer applies. UK tax liability will instead be determined based entirely on residency history.
 
If you’ve been resident in the UK for 10 out of the last 20 tax years, you’ll be treated as a long-term UK resident—meaning your entire global estate could now be subject to IHT. Even after leaving the UK, HMRC may continue to treat you as liable under a 10-year tail rule.
 
This change also eliminates structures like offshore trusts and the remittance basis for non-doms, putting pressure on expats with complex cross-border financial lives. If you’re unsure how your residence status affects you, we recommend booking a Cross-Border Wealth Review with one of our international advisers.

Pensions in the IHT Net by 2027

In 2027, a second reform comes into play. From 6 April, unused UK pension funds—including commercial property held within a SIPP or SSAS—will be treated as part of your estate on death. Until now, pensions have provided a highly tax-efficient route for passing on wealth. That window is closing.
 
Worse still, if the pension holder dies after the age of 75, and their funds are inherited by a UK tax resident, the pension can be hit with an income tax charge of up to 55%, followed by a 40% inheritance tax. In some cases, up to 75% of your pension could be lost to tax.
 
If your pension includes commercial property or rental income, now is the time to review your structure with one of our UK Pension Planning Experts.

Why Expats in Spain, the EU, Switzerland and the US Are Still Affected

One of the most common misconceptions we hear is that living outside the UK removes you from HMRC’s reach. Unfortunately, that’s no longer true.
 
Even if you reside in Spain, Portugal, Switzerland, France, or the US, your UK tax history, residency status, and UK-situs pension assets can still subject you to UK IHT. Additionally, if your trustees are UK-based or your pension scheme is UK-registered, the jurisdiction still applies.
 
Cross-border planning is essential. Your estate plan must account for both UK inheritance tax law and the local succession or wealth tax rules in your country of residence. Our International Estate Planning specialists can help you coordinate a clear and compliant approach.

Real Clients. Real Risks.

We’re already working with clients affected by these changes:
 
  • A British business owner in Spain who owns a UK office through a SIPP.
  • A retiree in Switzerland with a SSAS generating property income.
  • A dual UK/US citizen living in Florida, unaware that their pension is exposed to both US and UK tax regimes.
  • A family in Portugal now facing UK IHT and local succession levies on the same estate.
 
If your circumstances sound similar, we urge you to take action now.
 
Cross-border planning is essential. Your estate plan must account for both UK inheritance tax law and the local succession or wealth tax rules in your country of residence. Our International Estate Planning specialists can help you coordinate a clear and compliant approach.

What You Can Do Today

Understanding the impact of these changes starts with a simple question: Are you still tied to the UK tax net?
 
If you’ve lived in the UK for 10 of the last 20 years, hold a SIPP or SSAS, or have pension assets tied to UK property, it’s time to reassess your exposure. We can help you:
 
  • Evaluate your residence history and current status under the 2025 rules
  • Review and restructure your UK pension assets, including SIPP-held property
  • Quantify your IHT risk under both new and existing legislation
  • Develop tailored mitigation strategies, from lifetime gifting to international restructuring
 
This is more than a domestic issue. It’s a complex international challenge that demands cross-border expertise.

Why Private Client Consultancy?

We’re not generalists. At PCC, we specialise in helping UK expatriates and internationally mobile families manage the unique risks of cross-border wealth. Our advisers operate throughout Spain, the EU, Switzerland, and the US, and understand the subtleties of multi-jurisdictional planning.
 
Whether you need support with pension structuring, IHT planning, international estate management, or tax residency assessments, our team brings deep expertise and practical guidance every step of the way.

Book Your Free Cross-Border Wealth Review

With these major reforms on the horizon, the worst thing you can do is wait. Let us help you prepare, protect, and plan.
 
Schedule a consultation now or call us on +34 951 158 650
 
Let’s ensure your legacy reaches your family—not the tax office.
Book A Complimentary Discussion Today
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Disclaimer: Tax laws, rates, and reliefs are subject to change and may vary depending on individual circumstances and residency status. Any information provided on this website is based on our understanding of current regulations (or the date of when the content was published) and should not be considered personalised financial or tax advice. As tax obligations can differ across regions, countries and evolve over time, we strongly recommend seeking professional advice tailored to your specific situation before making any financial decisions.

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We’re Moving Offices on 1st August 2025!

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Private Client Consultancy is excited to announce that we’ll be moving to a brand-new office space, designed to better serve our clients and reflect our continued growth.

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