Test your understanding: answers

(1). In the tax year 2025/26, when Sparrow made the lifetime gifts, he was not long-term UK resident, as he had only been UK tax resident for nine of the previous 20 tax years (from 2016/17 to 2024/25 inclusive). 

Therefore, the gift of the property in Twitcheria is not within the charge to UK IHT. Conversely, gifts of UK assets are within the charge to UK IHT regardless of long-term UK residence status. Therefore, as Sparrow died within seven years of the potentially exempt transfer to his niece of UK cash, this is chargeable to IHT on his death. 

When Sparrow died in the tax year 2026/27, he was long-term UK resident and so all his assets, both in the UK and overseas, are chargeable to IHT.