Leaving the UK for Italy: Why Inheritance Tax Planning Must Not Be Left Until Last
- Marianna Penna
- Jul 6
- 7 min read
For many UK-based high-net-worth and ultra-high-net-worth individuals, Italy has become one of the most attractive destinations in Europe.
It offers an exceptional lifestyle, access to European culture, family continuity, property opportunities, and, for the right individuals, a compelling tax framework through the Italian Article 24-bis neo-resident regime.
Much of the conversation around relocating to Italy focuses on income tax, capital gains tax and the annual substitute tax available under Article 24-bis.
Those issues are important.
But for internationally mobile families, there is another question that should be addressed with equal care:
What happens to the estate on death?
This is the focus of the latest article in our Road to Naples series by Dr Clifford Frank, Senior Partner at LEXeFISCAL LLP. The article examines the inheritance tax fault line between the United Kingdom, Italy and the 1966 UK–Italy Estate Tax Treaty.
The key message is clear: relocating to Italy can be highly attractive, but inheritance tax and succession planning must be considered before the move, not after it.
The Question Often Left Too Late
A common assumption is that once an individual leaves the UK, becomes resident in Italy and elects into the Italian neo-resident regime, their worldwide estate will automatically fall outside the UK inheritance tax net.
That assumption can be dangerously incomplete.
A move to Italy may change where a person lives. It may change where they are tax resident. It may allow access to the Article 24-bis regime.
But it does not automatically remove all UK inheritance tax exposure.
To understand the position properly, three concepts must be considered together:
Residence — where an individual lives for tax purposes.
Domicile — where the law considers an individual’s permanent home to be.
Situs — where an asset is located for tax purposes.
These concepts are often confused, but they are not the same. The distinction matters because the UK, Italy and the 1966 UK–Italy Estate Tax Treaty do not all rely on the same connecting factor.
The UK’s New Residence-Based Inheritance Tax System
From 6 April 2025, the UK inheritance tax regime moved away from domicile as its central connecting factor and introduced a residence-based system.
Under the new framework, an individual can be treated as a long-term UK resident if they have been UK resident for at least ten of the twenty tax years before the relevant chargeable event, including death.
This matters for individuals leaving the UK because the exposure does not necessarily end on departure.
Where a long-term resident leaves the UK, their worldwide estate may remain within the scope of UK inheritance tax for a period after departure. This is commonly referred to as the departure “tail”.
Depending on the individual’s residence history, that tail can last between three and ten tax years.
In practical terms, a person who has lived in the UK for many years cannot assume that moving to Italy immediately removes their worldwide estate from the UK inheritance tax net.
The longer the UK residence history, the longer the potential exposure after departure.
UK-Situs Assets Remain Exposed
Another critical point is that UK-situs assets remain within the UK inheritance tax net regardless of the owner’s residence status.
A London property, UK shares or other UK-situated assets may remain taxable in the UK even after the individual has relocated to Italy.
This means that a client planning a move to Italy must look not only at their personal residence position, but also at the composition and location of their estate.
For many families, the key planning question is not simply, “Where will I live?”
It is also:
Where are my assets located?
The Italian Succession Tax Position
Italy has its own inheritance and gift tax regime, known as imposta sulle successioni e donazioni.
In broad terms, where the deceased or donor is resident in Italy, Italian succession tax can apply to worldwide assets. Where the deceased or donor is not resident in Italy, the charge generally applies only to Italian-situs assets.
However, the Article 24-bis neo-resident regime includes an important succession and gift tax benefit.
For individuals who validly elect into the regime, Italian inheritance and gift tax may be limited to assets situated in Italy during the period in which the option is valid.
This can be highly valuable. It means that foreign-situs assets may fall outside the Italian succession tax charge while the Article 24-bis election remains in force.
But this Italian exemption does not automatically neutralise UK inheritance tax.
That is where the planning becomes more complex.
The 1966 UK–Italy Estate Tax Treaty
One of the most important parts of the analysis is the 1966 UK–Italy Estate Tax Treaty.
This treaty governs the interaction between the two countries in relation to duties on estates of deceased persons.
Its importance is often underestimated.
The reason is that the treaty still operates by reference to common-law domicile, even though the UK domestic inheritance tax regime has moved towards a residence-based system.
This creates a mismatch.
UK domestic law now asks whether the individual is a long-term resident.
Italy looks at residence and the situs of assets.
The treaty asks where the individual is domiciled at common law.
These questions may produce different answers.
A person may have left the UK and become resident in Italy, but still retain a UK domicile of origin for common-law purposes. This can have significant consequences for the allocation of taxing rights between the UK and Italy on death.
Why Domicile Still Matters
Domicile is not the same as residence.
Residence can change relatively quickly, depending on days, ties and statutory rules.
Domicile changes much more slowly.
A person born in the UK to UK parents may have a UK domicile of origin. That domicile is not lost simply because they move abroad. To acquire a domicile of choice in Italy, there must generally be both physical presence in Italy and a settled intention to remain there permanently or indefinitely.
That intention must be evidenced by conduct over time.
Relevant factors may include the disposal of UK property, relocation of family and business life, the creation of an Italian will, long-term integration in Italy, and a clear absence of intention to return to the UK to live.
This is why inheritance tax planning cannot rely on residence alone.
For many relocating families, the journey from UK residence to Italian residence may be relatively clear. The journey from UK domicile of origin to Italian domicile of choice may be longer, more evidential and more difficult to prove.
The Real Planning Fault Line
The fault line arises because three systems must be read together:
The UK’s residence-based inheritance tax regime.
Italy’s succession tax rules and the Article 24-bis exemption.
The 1966 UK–Italy Estate Tax Treaty, which still refers to domicile.
This creates a layered exposure.
In the years after departure, a UK long-term resident may still be within the UK inheritance tax tail. If they also retain a UK domicile of origin for treaty purposes, the treaty may continue to support the UK’s right to tax the worldwide estate.
At the same time, the Italian Article 24-bis regime may exempt foreign assets from Italian succession tax. While this is beneficial from an Italian perspective, it may also mean there is little or no Italian tax to credit against a UK inheritance tax liability on foreign assets.
The result can be unexpected UK exposure on assets that the client assumed had moved outside the UK net.
Lifetime Planning and Death-Time Planning Are Not the Same
Another important point is that the UK–Italy Estate Tax Treaty applies to charges arising on death. It does not govern lifetime transfers.
This means lifetime gifts must be analysed separately.
On the UK side, lifetime gifts may fall within the potentially exempt transfer regime, with the familiar seven-year survivorship rule. On the Italian side, the Article 24-bis exemption may apply to gifts of non-Italian assets by a qualifying elector.
But because the treaty does not apply to lifetime transfers, any overlap between the two countries must be considered under domestic rules and any available unilateral relief.
For this reason, a coherent estate strategy may need to combine both lifetime planning and death-time planning, each analysed on its own terms.
What Families Should Consider Before Moving
For UK individuals and families considering a move to Italy, the inheritance tax analysis should begin early.
The key questions include:
Are you a long-term UK resident under the new inheritance tax rules?
How long is your UK inheritance tax departure tail?
Which assets are UK-situs, Italian-situs or foreign-situs?
Do you still retain a UK domicile of origin?
What evidence would support the acquisition of an Italian domicile of choice over time?
How does the Article 24-bis regime affect your Italian succession and gift tax position?
Should lifetime gifting form part of the strategy?
How do your wills, trusts, property structures and family arrangements interact across both jurisdictions?
These questions should be answered before irreversible steps are taken.
The Road to Naples
The Road to Naples series has been created to help internationally mobile families, private clients, entrepreneurs, investors and advisers understand the real legal and tax architecture behind relocating to Italy.
In May and July 2027, during the America’s Cup season, LEXeFISCAL will host an exclusive Road to Naples VIP Experience in Naples.
This curated private client experience will bring together selected international families, investors, advisers, sponsors and partners interested in Italy as a destination for residence, investment, lifestyle and legacy.
Naples will be more than a location.
It will be the setting for strategic conversations around wealth, mobility, succession, culture, opportunity and the future of international living.
Final Thought
The move from the UK to Italy under Article 24-bis can be a powerful opportunity for the right individual or family.
But the inheritance tax position must not be left until last.
A clean move requires more than relocation. It requires coordinated UK–Italy advice, careful residence planning, a clear understanding of domicile, a review of asset situs, and a long-term estate strategy.
The destination may be Italy.
But the journey must be planned properly.
To read Dr Clifford Frank’s full technical article on the UK–Italy inheritance tax position, please download the full insight from the Road to Naples series at this link
To register your interest in the Road to Naples VIP Experience 2027, contact:
LEXeFISCAL LLP
33 Cavendish Square, London W1G 0PW
Vincit Veritas.
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