Ten-yearly charge, every decade, if the Foundation keeps the UK company shares
Illustrative
£387,450
One-off exit charge in 2035-36 on the policy route, with no ten-yearly charge after
Illustrative
£0.90m
The difference between the two routes over thirty years, on these assumptions
Figures marked illustrative are worked examples on the stated assumptions, not projections or guarantees. · For professional advisers and their clients
01
The client
Who was the client?
At a glance
The client: Duncan, 52, British national, Dubai resident since 2025, married with two children at university
The challenge: £7.5m of UK commercial property held through UK companies, which stays within UK inheritance tax whatever his residence, plus a Foundation within the UK trust regime
UK inheritance tax: once he is no longer a long-term UK resident, a one-off exit charge arises and the ten-yearly charges stop
Foundation or personal holding: the Foundation is kept for its governance; a client who wants only the tax outcome can hold the policy personally and save the entry charge, the exit charge and the whole relevant property analysis
Barbados: the shares sit in a separate account, ring fenced by statute
What can still be changedis what the foundation holds before its first ten-year anniversary.
The entry charge is a sunk cost. The recurring charges are not.
United Kingdom
Commercial property stays outside ATED and outside the close company rule that catches residential and agricultural property
United Arab Emirates
The Foundation draws by partial surrender from policy value, with no UAE personal tax
Barbados
The shares sit in an account kept apart from the insurer's own assets and from every other policy
02
The three jurisdictions
What was at stake, and what changed
Three countries reach this structure: the one where the property sits, the one where he lives, and the one where the policy is issued. Each is answered separately.
United Kingdom
Where the assets sit
Exposure without PPLI
×Exposure: UK land and shares in private UK companies are never excluded property, whatever the owner's residence. About £2.87m at 40% on £7.5m, after the nil rate band
×Exposure: Funding the Foundation was a chargeable transfer, with a 20% entry charge of about £1.435m. While it holds UK company shares, a ten-yearly charge of about £430,500 follows each decade
Inside the structure
✓Inside the structure: Once he is no longer a long-term UK resident, the policy becomes excluded property: a one-off exit charge of about £387,450 arises in 2035-36, and the ten-yearly charge stops
✓Inside the structure: Commercial property stays outside ATED and outside the close company rule that catches residential and agricultural property
United Arab Emirates
Where he lives today
Exposure without PPLI
×Exposure: No personal income tax and no capital gains tax on investment income, so nothing here offsets the UK charges
×Exposure: Rents reach him as dividends and loan repayments up the corporate chain, after UK corporation tax on the rental profits in the property companies
Inside the structure
✓Inside the structure: The Foundation draws by partial surrender from policy value, with no UAE personal tax
✓Inside the structure: The policy pays the beneficiaries named under it and under the Foundation charter
Barbados
Where the policy sits
Why Barbados
•Barbados was chosen from the family's asset map. UK property and non-US persons point to Barbados. US shares would point to Bermuda
•This family are non-US persons holding UK property, so a Barbados carrier set up for non-US business is the lower-cost fit
Inside the structure
✓Inside the structure: The shares in the property companies sit in an account kept apart from the insurer's own assets and from every other policy, which its general creditors cannot reach
✓Inside the structure: The carrier is a Class 2 licensee regulated by the Financial Services Commission
Illustrative
£2.87m
UK inheritance tax at 40% on £7.5m held directly, after the nil rate band
Illustrative
£1.435m
20% entry charge already incurred on funding the Foundation
Illustrative
£430,500
Ten-yearly charge, each decade, if the shares stay in place
Why the timing mattered
Duncan's tail runs to the end of 2034-35. On 6 April 2035 the policy becomes excluded property and the exit charge arises. The Foundation's first ten-year anniversary follows in early 2036. The structure depends on the tail ending before the anniversary.
03
The outcome
Holding the companies, or holding the policy
The same £7.5m, before and after. The difference is the ten-yearly charge under the relevant property regime. Every figure is on the assumptions in the note beneath the table.
Foundation holding the companiesInside the Barbados based PPLI
What the Foundation owns
Holding the companiesExposure: Shares in private UK companies, never excluded property
Inside the PPLIInside the structure: A Barbados policy, excluded property once he is not a long-term UK resident
Ten-yearly charge from 2036
Holding the companiesExposure: £430,500 per anniversary, indefinitely
Inside the PPLIInside the structure: Nil, subject to the three conditions below
Exit charge
Holding the companiesUnchanged: None; the shares stay relevant property
Inside the PPLIUnchanged: About £387,450, once, on 6 April 2035
Entry charge
Holding the companiesExposure: £1,435,000, already incurred
Inside the PPLIUnchanged: Unchanged. A sunk cost either way
Reservation of benefit
Holding the companiesExposure: Settlor among the beneficiaries; no offshore carve-out available
Inside the PPLIInside the structure: Settlor excluded from benefit, on advice in both jurisdictions. The exclusion is a deemed transfer, with a seven-year death exposure
Creditor separation
Holding the companiesUnchanged: Corporate only
Inside the PPLIInside the structure: Statutory separate account, with the limits set out in the full case study
Figures illustrative. Value held flat at £7.5m; nil rate band £325,000 throughout; no chargeable transfers in the seven years before the Foundation was funded in the first quarter of 2026. Entry charge 20% on £7,175,000. Ten-yearly charge at 30% of the effective rate: 5.74% × £7,500,000 = £430,500. Exit charge on 6 April 2035: 5.74% × 36/40 = 5.166% × £7,500,000 = £387,450. Thirty-year totals: £2,726,500 holding the companies, £1,822,450 holding the policy. Policy charges apply and reduce policy value. The inheritance tax result depends on a residence condition that is not satisfied until 2035 and on law remaining as it is.
Figure 1
Where the £7.5m sits, before and after
The Foundation and the property companies did not change. What the Foundation holds did.
Before
UAE Foundation
Funded in Q1 2026; 20% entry charge paid
owns the shares in
Two UK companies
Never excluded property. Ten-yearly charge of £430,500 each decade
which own
£7.5m of UK commercial property
After
UAE Foundation
Policyholder; settlor excluded from benefit
premium, in specie
Barbados based PPLI
Separate account, Class 2 licensee regulated by the Financial Services Commission
death benefit
Beneficiaries
Named under the policy and under the Foundation charter
insurer owns
Shares in the two UK companies
Held in a separate account, beyond the insurer's general creditors
which own
£7.5m of UK commercial property
Unchanged
Ownership diagram. Before: the UAE Foundation holds the shares in two UK property companies, which stay within UK inheritance tax. After: the Foundation holds a Barbados based PPLI, the insurer holds the company shares in a separate account, and the managing agent is unchangedFigure 1. The Foundation, the companies and the property are unchanged. The insurer became the legal owner of the company shares when they were transferred in as the premium.
£2,726,500
Thirty-year total, Foundation holding the companies
£1,822,450
Thirty-year total, Foundation holding the policy
£0.90m
The difference between the two routes over thirty years
The Foundation stayed.What it holds changed.
One change turns a charge that repeats every decade into a charge that happens once.
04
The dates
When the charges bite: the tail, the exit charge and the first ten-year anniversary
The structure depends on the residence tail ending before the Foundation's first ten-year anniversary.
The two clocks, side by side
Timeline 2025 to 2041. Duncan is a long-term UK resident until 5 April 2035. On 6 April 2035 the policy becomes excluded property and an exit charge of about £387,450 arises. The Foundation's first ten-year anniversary follows in early 2036. If the Foundation still held UK company shares the £430,500 ten-yearly charge would arise in 2036 and every decade after
Long-term UK resident: worldwide estate in scope
Ten consecutive non-resident tax years, 2025-26 to 2034-35
Tail ends 5 April 2035
If the Foundation still holds UK company shares
Never excluded property. Ten-yearly charge in 2036 and every decade after
First ten-year anniversary, early 2036
If the Foundation holds a Barbados policy
Exit charge, about £387,450
Relevant property until 2035; excluded property after, no ten-yearly charge
Duncan's tail runs to the end of 2034-35. On 6 April 2035 the policy becomes excluded property and the exit charge arises. The Foundation's first ten-year anniversary follows in early 2036.
The three conditions
01
The policy must genuinely be non-UK situs
A policy issued by a non-UK insurer is, as a starting point, situated where the insurer is resident.
02
Duncan must complete the required period
A year of UK residence before 6 April 2035 resets the count. He also has to live through the period.
03
The anti-avoidance rule must not bite
The point should be tested, not assumed, wherever any residential element exists.
Questions
Frequently asked questions
My client has already set up a UAE Foundation and put UK property into it. Is it too late?
Not for the recurring charges. The entry charge, if one arose, has already crystallised and cannot be recovered. What can still be changed is what the Foundation holds before its first ten-year anniversary. If by that date it holds non-UK situs assets, such as a policy with a non-UK insurer or shares in a non-UK holding company, and the settlor has ceased to be a long-term UK resident, those assets are excluded property and the ten-yearly charge does not arise. A one-off exit charge arises at the point they become excluded property. If the Foundation still holds UK land or shares in private UK companies, the ten-yearly charge arises whatever the settlor's status.
Does the ten-year inheritance tax tail apply to all my departing UK clients?
No. The required period of non-residence is a sliding scale: three tax years where the client was UK resident for 10 to 13 of the twenty tax years ending with their last UK resident year, rising by one year for each additional resident year, to a maximum of ten where there were 20 resident years. A split year counts as a UK resident year. Count the client's resident years before quoting any figure. There is also a transitional carve-out for certain emigrants who were not UK domiciled on 30 October 2024.
Does this work the same way for a buy-to-let residential portfolio?
No. Residential property engages the rule that removes excluded property status from interests in close companies where value is attributable to UK residential property, together with its broad anti-avoidance provision, and ATED applies to dwellings above £500,000 held through companies. Commercial property is outside both. From 6 April 2026 UK agricultural property is inside the first of them. A residential case needs its own analysis and should not be built from this one.
Next step
Have a client who left the UKwith property behind?
If a foundation already holds UK property, it is not too late for the recurring charges. What can still be changed is what the foundation holds before its first ten-year anniversary. A private consultation looks at your client's residence history, what their structure holds, and whether a PPLI layer changes the answer.
Carlton Crabbe is the Founder and CEO of Capital for Life, an international life insurance advisory specialising in Indexed Universal Life and Private Placement Life Insurance for high net worth and ultra high net worth families, entrepreneurs and their advisers. With close to 30 years of specialist experience, and prior regulated roles at Barclays Private Bank and Grant Thornton, he designs cross-border IUL and PPLI structures for protection, liquidity and global estate planning across the UAE, UK, Europe, Africa, Asia and Australia.
Important information. Based on a real client case; names, personal details and figures have been changed or rounded. Information for professional advisers and their clients, not personal advice, a recommendation or an offer. Illustrative figures are examples on stated assumptions and are not guaranteed; policy charges apply. Clients should take independent tax and legal advice in each relevant country. Capital for Life does not provide UK tax advice or legal opinions. Capital for Life Ltd, company no. 12976386. Full version available on request.
Capital for Life · For professional advisers and their clients · Information, not advice.
