By Helen Daniilidou
08/09/2025
With UK reforms fully in force since 6 April 2025, the rules around inheritance tax (IHT), non-dom status, trusts, and overseas assets have changed substantially. For property owners, foreign residents, and high-net-worth individuals—particularly those with assets in both the UK and Cyprus—the practical effects are real and immediate. This article compares the UK’s new regime with Cyprus’ succession/inheritance law (including for foreigners), points out what to watch out for now, and offers suggestions for planning.
UK: What Is the Situation Since 6 April 2025
These changes are no longer proposed—they are current.
- The UK has replaced the older domicile / deemed domicile / non-dom basis with a residence-based regime for inheritance tax. GOV.UK+1HaysMacTax AdviserBDO UK
- From 6 April 2025, anyone who is a long-term UK resident (defined as being UK tax resident for 10 out of the last 20 tax years) is liable for UK IHT on their worldwide estate (including foreign assets) when they die or make certain transfers of assets. HaysMacTax AdviserGOV.UK
- There is also an IHT “tail” period after someone stops being UK resident: depending on how many years they were resident, they may still have exposure to IHT on overseas assets for a number of years. GOV.UKHaysMacBDO UK
- Trusts are treated differently: non-UK assets held in trusts are now more likely to be caught by IHT if the settlor is a long-term resident at the time of a chargeable event. The old protections for trusts under non-dom status have been removed in many cases. Tax AdviserHaysMacBDO UK
- Other relevant tax changes tied to non-dom status / non-UK income and gains have also been implemented (e.g. abolition of remittance basis, new foreign income/gains reliefs, etc.). KPMGHaysMacBDO UK
So, any planning that assumed the old regime is now at risk of being outdated: the rules that once sheltered overseas assets or trusts are much more limited.
Cyprus: Current Law & Considerations for Foreign Residents
Cyprus continues to offer several attractive legal features for succession and inheritance, but also has its own limitations.
- No inheritance tax in Cyprus. There is still no IHT or estate duty on death. Polycarpos PhilippouDanos Law Firm in CyprusInternational Bar Association
- Forced heirship / statutory portion remains part of the law. Under Cyprus’ Wills and Succession Law (Cap. 195), certain beneficiaries (“compulsory heirs” – spouse, children, perhaps grandchildren) are entitled to a fixed portion of the net estate (statutory portion), and only the disposable portion may be freely allocated by a will. Chambers & CoInternational Bar AssociationPolycarpos Philippou
- For foreign nationals / expatriates, especially EU citizens, EU Regulation 650/2012 (Brussels IV) allows in many cases the decedent to choose in their will that the law of their nationality should apply instead of the law of their habitual residence. This choice can allow bypassing the forced heirship rules of Cyprus. Chambers & CoM. Shambartas LawyersLexology
- Wills in Cyprus must be carefully drafted to ensure these choices are valid (i.e. the choice of nationality law must be clearly expressed). Lawyers in CyprusM. Shambartas Lawyers
Key Contrasts Now That UK IHT Reforms Are Live
Here are updated comparison points, reflecting changes as of now:
| Factor | UK (Post-6 April 2025) | Cyprus |
|---|---|---|
| Tax on death / worldwide assets | Long-term UK residents are taxed on worldwide assets at death (or certain transfers), including foreign property. Old non-dom protections largely removed. | No inheritance tax. Foreign assets of deceased are not taxed on death under Cyprus law. |
| Trusts & non-UK property | Trusts are more exposed: if the settlor is a long-term resident, foreign assets in trusts may be caught by IHT. Removed many of the previous trust protections. Tax AdviserBDO UKHaysMac | Trusts under Cyprus law (e.g. Cyprus International Trusts) may be used for planning; forced heirship can be avoided via law-choice in many cases. Use of trusts still needs legal advice. |
| Statutory / forced heirship constraints | UK allows more testamentary freedom; fewer forced heirship constraints (subject to specific family provision claims). | Cyprus forces certain minimum inheritance rights to close heirs, unless the testator validly opts for a different law via EU Succession Regulation. |
| Residency / exit “tail” effects | If you leave the UK after being long-term resident, there is a tail period during which overseas assets may still be subject to IHT. So leaving the UK doesn’t instantly remove exposure. GOV.UKBDO UK | Domicile status for forced heirship is less relevant if foreign (nationality law choice) is properly used; but forced heirship applies for those domiciled in Cyprus. |
| Need for up-to-date estate planning | Very high. Wills, trusts, asset ownership structure, timing of moves and residence are now material. | Also important: wills must be valid in Cyprus, express choice of law if needed, consider cross-border estate exposure. |
What Foreign Residents & Investors in Cyprus / with UK Ties Should Do Now
Because the UK rules are active, here are practical steps / planning suggestions, updated as of now:
- Review UK-UK residence history
If you have been UK resident for many years (especially 10+ in the past 20), assess whether you are or will become a long-term UK resident. If yes, understand that overseas assets (including property in Cyprus) may now be in the UK IHT net. - Check trust arrangements
If you have trusts that hold non-UK assets, particularly where you are or will be long-term UK resident, you need to review whether those trusts will expose your foreign assets to IHT, and whether any transitional reliefs apply. - Structuring or revising wills
For Cyprus property owners / foreign nationals, ensure your will is valid in both jurisdictions (UK & Cyprus). If you are an EU citizen, consider using the EU Regulation to choose the law of your nationality (if that gives more freedom) and have that clearly stated in the will. - Consider timing of moves / residence changes
If planning to move or cease residency in the UK, calculate when the “tail” will lapse. For example, if you were resident 10-13 years, you will still have 3 years of exposure after departure, etc. GOV.UKBDO UK - Valuation and ownership
Foreign properties: how they are owned (personally, via trust, via company etc.) will affect exposure. Also consider capital gains tax in Cyprus on future disposals. - Double-tax treaties / international conflict
While Cyprus may not impose inheritance tax, other countries (UK, possibly others) might. Identify treaties or legal mechanisms; sometimes probate in one jurisdiction may trigger tax in another. - Legal advice in both jurisdictions
Because laws differ (UK vs Cyprus), and international estate planning is complex, it’s essential to get good legal/tax advice in both places, especially for property (immovable property), wills, trusts.
Case Study:
Maria, a UK national, has a villa in Cyprus, several overseas investments, and has been UK resident 11 of the past 20 years. As of now, if Maria dies, not only will her UK-based assets be subject to UK IHT, but her Cyprus villa and other foreign investments are also potentially within the UK IHT net—unless she has taken planning steps (structuring via trust, preparing a will choosing nationality law, etc.). Meanwhile, under Cyprus law, that villa (if located in Cyprus) is unaffected by Cyprus inheritance tax (none), but her will may be constrained by forced heirship unless she validly opts otherwise.Sample Scenarios
Scenario 1: UK Long-Term Resident with Cyprus Property
Mr. A, UK resident for 15 years, owns a holiday villa in Protaras worth €500,000.
- Under old rules: property not subject to UK IHT.
- Under new rules: full value now within UK IHT scope → potential £170,000 tax bill at death.
Scenario 2: Retiring to Cyprus
Mrs. B sells her London home and relocates permanently to Cyprus. She has lived in the UK for 12 of the last 20 years.
- Her Cypriot property is still within UK IHT scope for the next few years (“tail effect”).
- Once she passes outside the IHT net, Cyprus inheritance rules apply—meaning zero inheritance tax.
Scenario 3: Non-Resident Investor
Mr. C, German resident, buys an apartment in Ayia Napa as an investment.
- No UK liability.
- No Cyprus inheritance tax.
- Only capital gains tax applies if his heirs sell the property in the future.
Conclusion
The UK’s IHT regime is no longer a future planning concern—it’s a present reality. For those with cross-border assets, especially in Cyprus, the lack of inheritance tax in Cyprus is still a compelling advantage; but that doesn’t automatically protect you from UK IHT if you are or become a long-term UK resident.
Why Work With Plus Wise Estates
At Plus Wise Estates, we don’t just help you find a property in Cyprus—we guide you through the bigger picture. From understanding how inheritance and taxation rules apply to your situation, to structuring your purchase in the most efficient way, our team ensures you have the clarity you need at every step.
We regularly prepare side-by-side comparison charts, sample case studies, and visual guides showing how the UK and Cyprus systems differ for foreign residents and non-doms. This makes it easy to see not only the lifestyle benefits of living in Cyprus, but also the long-term financial advantages.
Whether you are buying a holiday home, relocating permanently, or planning for cross-border succession, our experience ensures that your investment is secure, compliant, and optimised for your family’s future.
Contact us at admin@pluswiseestates.com and let us help you find your home in Cyprus—with the confidence that your inheritance and property planning are in safe hands.