With over three decades spent working in the UK and global property markets, I’ve seen firsthand how quickly policy shifts can undermine confidence, stall transactions, and prompt investors to look elsewhere. That’s why last month’s announcement - of increasing the inheritance tax (IHT) liability period to a maximum of ten years for long-term residents leaving the UK - is so controversial.
Once marketed as a hub for international wealth, Britain has long attracted investors seeking stability, transparency, and opportunity, especially in real estate. London and other major cities have established themselves as global capitals, where international buyers and developers have been instrumental in revitalising urban areas, funding large-scale infrastructure projects, and generating thousands of jobs across construction, finance, and property services.
However, this change in legislation is reflective of an increasingly inhospitable environment for property investors. It’s a misguided move by the government, with real and immediate consequences for wealth creators and their long-term commitment to this country.
Inheritance tax, in its current form, is already seen by many as outdated and disproportionate. It adds up to about 0.7% of all tax receipts and, in its simplest definition, is a death tax applied to your tax-paid ‘living estate’. The UK has one of the highest IHT rates and lowest thresholds in the developed world, with a top rate of 40% applied to estates over £325,000. In London - where the average house price is more than double that - people with modest incomes can face significant tax burdens.
Separately, long-term residents - those who have been in the UK for a total of ten out of the previous 20 years - could now have to wait up to a full decade after relocating abroad before their estate becomes fully exempt from UK inheritance tax. This is due to a new “tail provision” designed to prevent tax avoidance by moving abroad shortly before death. The tail lasts at least three years, increasing by one year for each additional year of UK residence, up to a maximum of ten years.
