Double tax relief for IHT

Produced by Tolley in association with

Trusts and Inheritance Tax

Guidance

Where a double tax treaty has been entered into between the UK and a foreign territory, double tax relief for inheritance tax (IHT) will apply.

Where unilateral relief can also apply, the provision that provides the greatest relief can be claimed. See the Unilateral relief for IHT guidance note.

Where a double tax treaty applies it should be considered in detail. Double tax treaties can be divided into those entered into before 1975 and more recent treaties.

Pre-1975 treaties

These include situs codes and have been made with:

•
France
•
India
•
Italy
•
Pakistan (not including Bangladesh)

They apply only to IHT imposed on death and not for lifetime chargeable transfers or IHT charged on failed potentially exempt transfers (PETs).

The pre-1975 treaties provide exemptions to UK IHT rather than credits against tax. This means that the tax is exempt from being paid, rather than being calculated as due but with a credit allowed for the amount of the foreign tax paid.

Overriding deemed domicile

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