Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.
A status of non domicile still leads to all UK assets being considered for UK Inheritance tax, I am afraid to advise. It just would mean assets and estate OUT of the UK could be excluded.
To be treated as not domiciled this would mean having Relinquishing your UK passportSevering all links with social organisations and join new organisations in your country of residencePurchase property in your country of residence and selling all your UK based property Closing all UK bank accounts
So I would imagine that its unlikely you have grounds to argue this with the NON UK assets being included within the UK estate position at this time.
Whilst we have a treaty with Israel this does not cover Inheritance tax directly - so would have to be claimed as an expense, if any charge arose (although all it would have meant is that any Inheritance tax you had been charged on either of your estates in Israel, could you offset against any UK charge arising, but as you advise this is XERO is not an issue that needs addressing further)
Plus the full £650,000 is only avilable if NONE of the NIL band has been utilised by the first spouse to pass.
Let me know if you have any follow up information you need from my response