Trusts and Inheritance Tax

Unilateral relief for IHT

Produced by Tolley
  • 23 Mar 2022 10:56

The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Unilateral relief for IHT
  • Conditions for relief
  • The property
  • The tax credit
  • Property situated in the overseas territory making the charge to tax
  • Property either situated neither in the UK or the overseas territory or situated in both
  • Tax imposed by more than one overseas territory and the property is not situated in the UK or any of the overseas territories, or is situated in the UK and all the territories
  • Unilateral reliefs on lifetime transfers
  • Tax of a character similar to UK IHT
  • How to claim

Unilateral relief for IHT

Unilateral relief may be available as a credit against UK inheritance tax (IHT) where a tax of a character similar to IHT has been imposed on property in an overseas territory.

Unilateral relief will apply in relation to territories to which double tax relief does not apply.

Where double tax relief can also apply, the provision that provides the greatest relief can be claimed. See the Double tax relief for IHT guidance note.

Some foreign jurisdictions have their own version of unilateral relief, such as Germany. These may be limited to some extent (in the same way as UK unilateral relief).

Conditions for relief

For the relief to apply, tax must be imposed in a territory outside the UK and be attributable to the value of any property, and:

  1. the tax must be of a character similar to UK IHT or be chargeable on or by reference to death or lifetime gifts

  2. the UK IHT chargeable on the same occurrence must be attributable to the value of the same property

The property

Under IHTA 1984, ss 159(2)–(4) for

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