IHTM27187 - Foreign property: Double Taxation Conventions: Unilateral Relief: relief under IHTA84/S159 (2)

Where the property concerned is situated (under UK law) in the foreign country where the foreign tax has been charged, relief is due under IHTA84/S159 (2) and the credit due is equal to the foreign tax paid.

In practice, the credit cannot be more than the Inheritance Tax (IHT) attributable to the property concerned.

Example

Bernice died in September 2002, leaving an apartment in Spain valued at 拢50,000. Bernice鈥檚 total estate amounts to 拢300,000 (there were no lifetime gifts), with total IHT payable of 拢20,000.

The Spanish authorities charge tax equivalent to Sterling 拢4,000 on the apartment on Bernice鈥檚 death.

The IHT payable on the apartment is:

拢50,000 脳 (拢20,000 梅 拢300,000) = 拢3,333.33

So, the credit due under IHTA84/S159 (2) is restricted to 拢3,333.33.