Trusts and Inheritance Tax

Double tax relief

Produced by Tolley in association with Elizabeth Norton at Russell-Cooke Solicitors
  • 14 Jul 2020 11:31

The following Trusts and Inheritance Tax guidance note Produced by Tolley in association with Elizabeth Norton at Russell-Cooke Solicitors provides comprehensive and up to date tax information covering:

  • Double tax relief
  • Double tax treaties
  • Pre-1975 treaties
  • Post-1975 treaties
  • How to claim
  • Unilateral relief
  • Unilateral reliefs on lifetime transfers
  • Tax of a character similar to UK IHT
  • How to claim

Double tax relief

This guidance note is a summary of the information contained in the Double tax relief for IHT and Unilateral relief for IHT guidance notes. Those guidance notes provide more detailed information in the context of cross-border estates.

Double tax treaties

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 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:

  1. France

  2. India

  3. Italy

  4. 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.

Where a testator would satisfy the deemed domicile rules of IHTA 1984, s 267(2) and dies domiciled in India, Pakistan or France in accordance with the law of those countries, UK IHT will apply only to property situated within the UK or passing under a

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