For UK nationals and former UK residents living in Dubai, Abu Dhabi and other parts of the UAE, understanding UK inheritance tax for UAE residents has become increasingly important. Changes introduced from 6 April 2025 mean that an individual's UK residence history can play a significant role in determining whether overseas assets are exposed to UK Inheritance Tax (IHT).

Moving to the UAE does not automatically remove previous UK tax connections. Individuals who have spent substantial periods living in the UK may continue to have UK IHT exposure after becoming UAE residents. For families with significant wealth, businesses, property and investments, understanding these rules early can help support effective succession and estate planning.

What Is UK Inheritance Tax for UAE Residents?

The UK generally charges Inheritance Tax on the estate of someone who dies where the relevant assets fall within the UK IHT rules. For people living outside the UK, the position depends on factors including their UK residence history, the location of their assets and the ownership structure used.

Since April 2025, the concept of long-term UK residence has become particularly important. Broadly, an individual can be considered a long-term UK resident if they have been UK tax resident for at least 10 of the previous 20 tax years.

This means a person who has recently moved from the UK to the UAE may still have UK IHT exposure even though they are now living abroad.

For anyone researching UK inheritance tax for UAE residents, the first step should therefore be to review their historical UK tax residence rather than relying solely on their current UAE residency.

How the UK Long-Term Residence Rules Work

The post-April 2025 rules replaced the previous domicile-based approach for determining the IHT treatment of many overseas assets.

Under the new framework, long-term UK residents can potentially remain within the UK IHT regime for a period after leaving the UK. The length of this period depends on the individual's circumstances and previous UK residence history.

For example, consider a UK entrepreneur who has lived in the UK for more than 10 of the previous 20 tax years before moving permanently to Dubai. Becoming a UAE resident does not necessarily mean that their worldwide estate immediately falls outside UK IHT.

Their residence history, departure date, assets and ownership structures all need to be considered.

This is why international estate planning should ideally begin before or soon after a move to the UAE.

What Assets Could Be Relevant?

UAE residents with previous UK connections should review both UK and overseas assets.

Potentially relevant assets can include UK residential property, commercial property, shares, investment portfolios, business interests and other assets located in the UK.

Depending on the individual's residence status and circumstances, certain non-UK assets may also need to be considered.

A comprehensive review should therefore include:

• UK property and investments
• Overseas property
• Shares and investment portfolios
• Family businesses
• Company interests
• Trust arrangements
• UAE-based assets
• Lifetime gifts
• Existing wills and succession arrangements

The purpose is to establish the individual's potential IHT exposure before considering whether any restructuring may be appropriate.

UAE Foundation UK Inheritance Tax Planning

A UAE Foundation may be considered as part of a broader succession and wealth-planning strategy for families with connections to both the UK and UAE.

When researching UAE Foundation UK inheritance tax, it is important to understand that a foundation is not automatically an IHT exemption or a simple method of removing assets from the UK tax net.

Foundations established in financial centres such as the DIFC or ADGM can provide a legal framework for holding family wealth, managing succession and establishing governance arrangements. However, the UK tax treatment must be considered carefully before assets are transferred into such a structure.

The individual's UK residence history, the nature of the assets, the timing of transfers and the legal characteristics of the foundation can all affect the analysis.

Therefore, a UAE Foundation should be viewed as part of a wider estate-planning strategy rather than as a standalone tax solution.

Can a UAE Foundation Reduce UK Inheritance Tax?

The answer depends entirely on the individual's circumstances and the structure being considered.

A foundation may help families organise ownership, governance and succession. It can potentially provide a framework for managing family wealth across generations and setting out how assets should be administered.

However, simply transferring assets to a UAE Foundation does not automatically remove UK IHT exposure.

This distinction is particularly important for former UK residents. If an individual is within the long-term UK residence rules, overseas assets and certain structures may continue to have UK IHT implications.

Before establishing or funding a foundation, families should therefore obtain professional advice on the UK tax consequences of the proposed arrangement.

DIFC and ADGM Foundations

The UAE has developed sophisticated financial centres that offer foundation structures for wealth and succession planning.

The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) both provide legal frameworks that can be relevant to international families.

A foundation can potentially help with:

• Family wealth governance
• Succession planning
• Asset ownership
• Intergenerational wealth transfer
• Family governance
• Long-term administration of assets

For families with UK connections, however, the structure must also be assessed under UK tax rules.

The legal purpose of a foundation and its treatment under UAE regulations do not necessarily determine how HMRC will treat the arrangement for UK IHT purposes.

Planning Before Moving to the UAE

People planning to leave the UK for the UAE should consider their estate-planning position before relocation.

A useful starting point is to calculate the individual's UK tax residence history over the relevant 20-year period. This can help establish whether the long-term UK residence rules could apply.

The next step is to create a complete inventory of assets and liabilities. UK property, overseas investments, business interests and family wealth structures should all be reviewed.

Existing wills and succession arrangements should also be examined.

Where significant wealth is involved, families may then consider whether a foundation, trust, company or another structure could support their long-term objectives.

The key is to establish the UK tax position before making major transfers or restructuring assets.

Lifetime Gifts and Estate Planning

Lifetime gifting can also form part of an inheritance tax planning strategy, but gifts should not be made without considering the relevant UK rules.

The timing of a gift, the asset transferred, the relationship between the parties and the donor's residence status can all affect the tax consequences.

For UAE residents who previously lived in the UK, lifetime gifts should therefore be reviewed alongside their wider UK IHT position.

This is especially important where a person is considering transferring assets to children, family members, a foundation or another wealth structure.

Why Professional Advice Matters

Cross-border inheritance tax planning can become complicated because several legal and tax systems may apply at the same time.

A UAE resident with UK connections may need to consider UK tax rules, UAE regulations and potentially the laws of the country where other assets or family members are located.

Professional advice can help identify potential exposure before decisions are made.

At Evolve Tax, international tax planning can be considered alongside the individual's wider circumstances, including UK residence history, asset ownership and succession objectives.

A Practical 2026 Planning Checklist

For UAE residents with UK connections, an effective planning process can include:

1. Review your UK tax residence history.
2. Determine whether you may qualify as a long-term UK resident.
3. Identify UK and non-UK assets.
4. Review existing wills and succession arrangements.
5. Consider lifetime gifts and their potential tax consequences.
6. Review trusts, companies and foundations.
7. Assess whether a DIFC or ADGM Foundation fits your succession objectives.
8. Obtain UK and UAE professional advice before restructuring significant assets.
9. Review your estate plan regularly as your circumstances change.

Conclusion

The rules surrounding UK inheritance tax for UAE residentsv have become increasingly important following the changes introduced in April 2025. Moving to Dubai or Abu Dhabi does not automatically eliminate UK inheritance tax exposure, particularly where an individual has a substantial history of UK tax residence.

A UAE Foundation can potentially play an important role in family governance and succession planning, but it should not be treated as an automatic solution to UK IHT. Anyone considering a foundation should first understand how the proposed structure could interact with their UK tax position.

For families with significant UK and UAE connections, early planning can provide greater clarity around asset ownership, succession and potential inheritance tax exposure.

If you are considering your UK-UAE estate-planning position, Evolve Tax can help you assess the relevant tax considerations and develop a structured approach based on your circumstances.