Singapore VCC insights

UK Property Inheritance Tax Non Resident Rules: Why a Singapore Company Does Not Shelter a London Home

By VCC Editorial Team · Published 10 November 2026

Short answer: Yes. A family living in Singapore that is not long-term UK resident still pays UK inheritance tax on UK property, including UK homes held through a Singapore or other non-UK close company, partnership or relevant loan, under Schedule A1 to the Inheritance Tax Act 1984. Companies holding UK homes also face ATED and UK tax on gains.

This article is general information only and is not legal, tax or investment advice. For matters needing legal advice, we work with a panel of experienced Singapore law firms.

Many Singapore-based families still own a London flat, a house used by children at university or a property held in an offshore company. The uk property inheritance tax non resident question is whether living in Singapore, which has no estate duty, takes that property out of UK inheritance tax (IHT), and whether a Singapore company, trust or variable capital company (VCC) helps. This note works through the UK statute and HM Revenue and Customs (HMRC) guidance, with every source checked on 10 November 2026, and assumes UK counsel will be instructed before anything is restructured.

Is UK property subject to inheritance tax if the owner is non resident?

Yes. A person based outside the UK remains within UK inheritance tax on UK assets, and UK land is the clearest example. Non-residence only changes whether non-UK assets are taxed.

HMRC’s guidance states that if you are based abroad, “Inheritance Tax is only paid on your UK assets, for example property or bank accounts in the UK.” The standard rate is 40% on the part of the estate above the £325,000 threshold, subject to reliefs and exemptions such as the spouse and charity exemptions. For someone who is not long-term UK resident only UK assets enter the calculation, so a valuable London home will usually produce a material charge on death. The planning question is whether a non-UK holding vehicle changes that. Since 2017 it largely does not.

Does a Singapore company or partnership shelter UK residential property from inheritance tax?

No. Schedule A1 to the Inheritance Tax Act 1984 looks through non-UK close companies and partnerships to the UK residential property they hold, and taxes the shares or partnership interest to that extent even when the owner is not long-term UK resident.

Before 6 April 2017, shares in a non-UK company were, for a non-UK domiciled owner, excluded property. Schedule A1, inserted by the Finance (No. 2) Act 2017, removed that shelter. Paragraph 2 applies to an interest in a close company or partnership whose value is “directly attributable to relevant UK property” or attributable to it through further close companies, partnerships or relevant loans. HMRC’s manual at IHTM04311 explains that only the value attributable to UK residential (and now agricultural) property is caught; value attributable to other assets “may remain excluded property”.

The mechanics matter for a family holding company:

• Attribution is by value. In HMRC’s example at IHTM04312, a Jersey company owning £7 million of relevant UK property within £21 million of assets has one third of its share value brought into charge for an owner who is not long-term UK resident.
• Debt is spread rateably. Paragraph 2(5) attributes a close company’s liabilities “rateably to all of its property”, so a mortgage secured on the London flat is not set only against the flat (HMRC Example 4).
• Tiers do not help. Property held through a subsidiary is still caught.
• The 5% de minimis aggregates family stakes. An interest below 5% of the close company or partnership is disregarded, but connected persons’ interests are added.
• Sale proceeds stay in charge for two years. Under paragraph 5, consideration for disposing of a caught interest, and repayments of a relevant loan, are not excluded property for two years from the disposal or payment.
• Anti-avoidance and treaties. Paragraph 6 disregards arrangements with a main purpose of avoiding the Schedule, and paragraph 7 provides that a double taxation agreement does not prevent the charge where the other territory levies no similar tax or levies it at an effective rate of 0%.

Paragraph 9 treats a non-UK company as close if it would be close were it UK resident, and paragraph 10 extends “partnership” to similar foreign entities. A family-owned Singapore company should be assumed within scope unless UK counsel advises otherwise.

Are loans and bank collateral used to buy UK property also caught?

Yes. Paragraphs 3 and 4 of Schedule A1 treat a “relevant loan” used to buy, maintain or enhance relevant UK property, and any collateral given for it up to the loan’s value, as non-excluded property of the lender or the person giving the security.

This is often the overlooked exposure. A parent who lends to a child to buy a flat near a UK university, or pledges a Singapore-booked portfolio for a London purchase, holds a UK-taxable asset although the loan or portfolio sits outside the UK. In HMRC’s examples at IHTM04313, a portfolio of £10 million pledged for a £3 million loan to buy a £5 million UK farmhouse leaves the owner with a taxable estate of £5 million: £3 million of capped collateral plus £2 million of net equity. A loan to a company is not a relevant loan, but the lender is caught as a participator. A loan ceases to be relevant when the property is sold.

How does the long-term UK resident test affect a Singapore-based family?

It decides whether non-UK assets are taxed too. A family member who is not long-term UK resident is taxed only on UK assets, including Schedule A1 property; a long-term UK resident is taxed on worldwide assets.

From 6 April 2025, under section 6A of the Inheritance Tax Act 1984, a person is a long-term UK resident in a tax year if UK resident for at least 10 of the previous 20 tax years. After leaving, the status continues for 3 tax years (13 or fewer resident years in the 20-year window) rising to 10 (resident throughout). HMRC’s guidance on inheritance tax for long-term UK residents also preserves a transitional rule: a person who was not UK domiciled or deemed domiciled on 30 October 2024, is non-resident in 2025-26 and does not return, is not a long-term UK resident.

Family member’s status	Directly held UK home	UK home in non-UK company or partnership	Non-UK investments
Never UK resident, or out of the tail	In scope (UK asset)	In scope to the extent attributable (Schedule A1)	Excluded property
Long-term UK resident, including during the post-departure tail	In scope	Full share value in scope	In scope

The Singapore move matters for the rest of the balance sheet, not for the London property. Our analysis of the UK exit position for a non-dom moving to Singapore covers the tail and trust charges in detail.

What capital gains tax applies when a non-resident sells UK property or the company that owns it?

Non-residents pay UK tax on direct and indirect disposals of UK land: capital gains tax for individuals and trustees, corporation tax for non-resident companies.

HMRC’s guidance on capital gains tax for non-residents sets out the key rules:

• Direct disposals of UK residential property must be reported and any tax paid within 60 days of completion (completions on or after 27 October 2021), even where there is no tax or a loss.
• An indirect disposal is the sale of an interest in an asset that derives 75% or more of its gross value from UK land, where the seller holds at least 25%. Spouses, civil partners and descendants are counted towards the 25%.
• For collective investment vehicles holding UK land, the indirect disposal rules may apply even below 25%.
• A non-UK company that sells UK property reports the gain on a UK corporation tax return and must register for corporation tax if it does not already file.
• Trustees of non-UK resident trusts must register the trust with HMRC before reporting, even where no tax is due.

For a Singapore family company, this means that selling the company rather than the flat does not avoid UK tax on the gain if the company is property-rich. A Singapore VCC that owns UK land does not obviously change this, and its investors may fall within the collective investment vehicle rules; take UK advice before using one for UK property.

What does ATED cost a company that holds a UK home?

A company, or a partnership with a corporate partner, that owns a UK dwelling worth more than £500,000 must file an ATED return each chargeable period and pay the banded charge unless a relief applies.

Property value (revaluation date 1 April 2022, or acquisition date if later)	Annual charge, 1 April 2026 to 31 March 2027
More than £500,000 up to £1 million	£4,600
More than £1 million up to £2 million	£9,450
More than £2 million up to £5 million	£32,200
More than £5 million up to £10 million	£75,450
More than £10 million up to £20 million	£151,450
More than £20 million	£303,450

The charges are from HMRC’s ATED guidance. Returns are made on or after 1 April in each chargeable period, and the 1 April 2022 valuation applies for the five periods from 2023 to 2024. Reliefs and exemptions should be checked property by property; HMRC also notes a higher rate of Stamp Duty Land Tax for corporate bodies. A London residence held in a company therefore carries an annual ATED cost unless a relief applies, corporate tax on any gain, and no IHT saving.

What did Budget 2026 announce about trust liabilities and debt deductions?

HMRC published a policy paper on 28 October 2026 announcing legislation in Finance Bill 2026-27 on liabilities relating to settled property. It is announced, not enacted, but its stated operative date has already passed.

The paper, “Inheritance Tax: preventing unintended deductions for liabilities in trust arrangements”, says the measure “will have effect for transfers of value made, and occasions on which Inheritance Tax is chargeable on or after 28 October 2026.” Its proposals are to:

1. Replace reliance on the trustee’s lien with a statutory rule that liabilities “properly incurred by trustees when acting on behalf of a settlement” are generally taken into account when valuing settled property, subject to the existing liabilities restrictions (the paper cites sections 162A to 162C and 175A).
2. Apply equivalent debt deduction restrictions where a beneficiary is treated under section 49 as entitled to the settled property, so that liabilities connected with value from that beneficiary’s own estate cannot reduce IHT.
3. Add supplementary anti-avoidance provisions and a time-limited power for consequential amendments.

HMRC expects it to affect “a small number of individuals”. Trustees of a Singapore trust that holds a London property, directly or through a company, and carries borrowing should have it reviewed against the draft rules now. Our note on UK Budget 2026 and trusts run from Singapore covers the other trust measures announced the same day.

How does Singapore compare, and does a Singapore trust, company or VCC help?

Singapore removed estate duty for deaths on and after 15 February 2008, so there is no Singapore death tax. That absence does not reduce UK IHT on UK property, and a Singapore structure does not take UK property outside it.

Three points follow. First, paragraph 7 of Schedule A1 keeps the charge where the other country has no similar tax, so there is no treaty to rely on. Second, a Singapore holding company or VCC is useful for governance and succession of non-UK assets, but for UK homes it meets look-through, ATED and corporate tax on gains. Third, a Singapore discretionary trust holding UK property directly or through a company is generally within the UK trust charges; HMRC’s IHTM04312 example applies a rate of 6% at a ten-year anniversary to caught shares where the settlor is not long-term UK resident.

The pattern resembles US estate tax for Singapore residents: the source country taxes its own assets wherever the owner lives. Our overview of whether Singapore has estate tax sets out the Singapore side.

A practical review usually runs in this order:

1. List every UK dwelling and agricultural holding, how it is held, and any connected loan or pledge.
2. Establish each family member’s UK residence history for the last 20 tax years.
3. Value the attributable share of each company or partnership, applying rateable debt and the 5% test.
4. Check ATED returns, reliefs and valuations for company-held dwellings.
5. Review trust-held property and trust borrowing against the Budget 2026 measure.
6. Have UK counsel model keeping, de-enveloping or selling before any change.

The Singapore side of that review, covering the holding company, VCC and family office structure, can run alongside the family’s UK advisers.

Frequently asked questions

Do I pay UK inheritance tax on a London flat if I live in Singapore?

Yes. HMRC states that people based abroad pay IHT on their UK assets, at a standard rate of 40% above the available threshold. Living in Singapore only affects your non-UK assets.

Can I avoid UK inheritance tax by holding the flat in a Singapore company?

No. Schedule A1 to the Inheritance Tax Act 1984 treats shares in a non-UK close company as non-excluded property to the extent their value is attributable to UK residential property, and company debt is spread rateably across all assets.

How quickly must a non-resident report the sale of UK residential property?

Within 60 days of completion, through HMRC’s Capital Gains Tax on UK property account, even with no tax to pay. Non-UK companies use a corporation tax return.

Has the Budget 2026 trust liabilities measure been enacted?

Not as at 10 November 2026. It was announced on 28 October 2026 for Finance Bill 2026-27, with a stated effective date of 28 October 2026. Check the Bill text when published.

Sources

• Inheritance Tax Act 1984, Schedule A1 (legislation.gov.uk)
• HMRC Inheritance Tax Manual, IHTM04311: Schedule A1
• HMRC: Capital Gains Tax on UK property or land if you are not a UK resident
• HMRC: Annual Tax on Enveloped Dwellings
• IRAS: Estate Duty

Raffles Corporate Services helps Singapore-based families and family offices organise holding companies, VCCs and governance around international property, alongside their UK counsel. We also handle VCC incorporation, family office set-up and ongoing compliance. Email hello@rafflescorporateservices.com or Call/SMS/WhatsApp +65 8501 7133, or visit Raffles Corporate Services.

Last reviewed: 10 November 2026. The Editorial Team, Variable Capital Companies Act.