Couples could be stressing over bills, tax and pensions abroad (Image: Getty)
A staggering nearly 5million Brits living abroad may need urgent reviews of their inheritance tax exposure – ahead of the UK’s new tightened rules, a global financial advisory giant’s CEO warns. The alert comes as sweeping changes overhaul how the UK assesses inheritance tax liability, with further reforms from April 2027 expected to pull pension wealth into the inheritance tax net for the first time.
In their policy paper dated May 11, 2026, the Government explained: “From 6 April 2027, most unused pension funds and pension death benefits will be brought within the value of a deceased person’s estate for Inheritance Tax purposes. “This removes distortions which have led to pension schemes being increasingly used and marketed as a tax planning vehicle to transfer wealth, rather than for funding retirement. It also removes inconsistencies in the Inheritance Tax treatment of different types of pensions.”
Read more: HMRC describes how new inheritance tax rules will work
Read more: HMRC confirms new inheritance tax rule affecting pensions
Now Nigel Green, CEO of deVere Group, warns on website DIY Investor how the 4.8million Britons living overseas may need to check their finances as many may believe leaving the UK somehow shields them from inheritance tax.
He explained: “A huge number of Britons abroad still believe leaving the UK automatically protects them from inheritance tax. For many people, this assumption is becoming dangerously outdated.”
For decades, inheritance tax exposure relied heavily on the concept of domicile – a complex legal framework linked to permanent home intentions and long-term family ties.
From April 2025, however, the UK moved toward a residence-based regime centred on “long-term UK residence”.
Under the new framework, individuals can potentially remain exposed to UK inheritance tax on worldwide assets if they were UK tax resident for at least 10 out of the previous 20 tax years.
Exposure can also continue long after somebody leaves Britain.
Depending on previous UK residency history, former residents may remain within the inheritance tax net for up to 10 tax years after departure.
Mr Green added: “Many expats think their UK tax exposure ends the moment they move overseas. It doesn’t.”
The changes carry major implications for British retirees abroad, internationally mobile executives, business owners and expats with substantial UK pension wealth with pressuring soaring from April 2027.
Current government plans will bring most unused pension funds and pension death benefits into inheritance tax, marking one of the biggest changes to UK estate planning in years.
Defined contribution pensions have historically been viewed as one of the most inheritance-tax-efficient structures available to British savers because they often sat outside the taxable estate on death but Green says this position is changing.
Mr Green continued: “The government is moving directly toward pension wealth.
“A lot of people overseas still believe pensions automatically sit outside inheritance tax. In many cases, that will no longer hold.”
Labour are looking for ways to increase taxation (Image: Getty)
Under the planned framework, unused pension pots and certain pension death benefits could face 40% inheritance tax.
Some beneficiaries may also face income-tax liabilities depending on how pension assets are inherited.
The potential impact stretches across SIPPs (self-invested personal pensions), private pensions, workplace defined contribution schemes, drawdown arrangements and uncrystallised pension funds.
deVere warned the risks become even more complex for Britons living in countries with separate inheritance and succession systems.
Spain applies inheritance and succession taxes. France operates forced-heirship rules.
Different jurisdictions also treat pension wealth differently following death, increasing the risk of overlapping tax exposure and cross-border estate conflicts.
Mr Green explained: “International families are entering a much tougher planning environment.
“Old non-dom assumptions and older pension-planning strategies no longer work the way many people think they do.”
He said Britons abroad should urgently review their years of UK tax residence, date of departure from Britain, pension structures, wills across jurisdictions, beneficiary nominations and possible inheritance tax exposure after 2027.
Mr Green concluded: “Britain is tightening the inheritance tax net around internationally mobile individuals.
“And the window for action is closing fast. Millions of people overseas may not yet realise how exposed they could still be.”