Inheritance Tax Double Taxation Relief: Avoiding IHT on the Same Assets Twice
If the deceased owned foreign assets that are taxed both by the UK and by a foreign country’s death tax, double taxation relief (DTR) under s159 IHTA 1984 prevents paying tax twice on the same asset. Here is how it works.
UK IHT Double Taxation Conventions
| Country | Relief type | Foreign tax | Notes |
|---|---|---|---|
| USA | Bilateral treaty | Federal estate tax (40% above $13.6m exemption 2026) | Most important treaty. UK-dom with US assets or US citizen with UK assets. |
| India | Bilateral treaty | Estate Duty (largely abolished — treaty of limited current effect) | India abolished estate duty in 1985 but treaty remains in force. |
| Pakistan | Bilateral treaty | Estate Duty Act | Check current Pakistani tax law before relying. |
| France | Bilateral treaty | Droits de succession (up to 60%) | French IHT on French assets of non-French deceased. |
| Italy | Bilateral treaty | Imposta sulle successioni | Italian succession tax (4%-8% depending on relationship). |
| Netherlands | Bilateral treaty | Erfbelasting (10%-40%) | Dutch succession tax. |
| South Africa | Bilateral treaty | Estate Duty Act (20%-25%) | South African estate duty. |
| Sweden | Bilateral treaty | Sweden abolished inheritance tax in 2005 — treaty of limited effect | Old treaty, largely academic. |
| Switzerland | Bilateral treaty | Cantonal inheritance taxes (vary by canton) | No federal Swiss inheritance tax; cantonal tax varies. |
| Ireland | Bilateral convention | Capital Acquisitions Tax (CAT) 33% | Old Estate Duty convention; Ireland now has CAT — check applicability. |
| Australia, Canada, Germany, Spain, UAE, Japan | Unilateral only (s159) | Varies | No bilateral IHT treaty. Unilateral credit only. |
How to Claim DTR on IHT400
Complete IHT400 Schedule IHT417 (Foreign Assets)
List all foreign assets — country of location, description, sterling value at date of death. Use spot rate or HMRC approved average rate. State which rate used.
Obtain evidence of foreign tax
Get a copy of the foreign tax assessment, demand, or calculation from the foreign tax authority. You cannot claim DTR on estimated tax — actual tax payable or paid must be evidenced.
Calculate the DTR credit using the lower-of formula
Credit = lower of (a) foreign tax attributable to the asset or (b) UK IHT × (foreign asset value ÷ total chargeable estate). Calculate asset by asset for each country.
State the DTR claim on IHT400
Enter the DTR credit amount on IHT400 to reduce total UK IHT payable. Attach IHT417 and supporting foreign tax evidence as part of the IHT submission.
Pay net IHT and keep evidence
Pay the reduced (net of DTR) IHT amount. Retain all foreign tax evidence in the estate file — HMRC may open an enquiry and ask for documentation.
Frequently Asked Questions
What is IHT double taxation relief?
When a UK-domiciled deceased owns assets situated in another country, and that other country also levies a death tax (estate tax, inheritance tax, succession duty) on those same assets, both the UK and the foreign country may charge tax on the same asset. Without relief, the estate would bear tax twice. Double taxation relief (DTR) under s159 IHTA 1984 gives a credit against UK IHT for the foreign tax paid, so the estate pays the higher of the two taxes but not both. DTR is available through two routes: (1) Unilateral relief under s159 IHTA 1984 — available for any foreign jurisdiction regardless of treaty, provided the foreign tax is a 'qualifying foreign tax' (a tax on death, similar in character to IHT); (2) Bilateral treaty relief — under the UK's specific double taxation conventions for IHT with certain countries, which may provide broader relief than the unilateral credit.
What countries does the UK have IHT double taxation treaties with?
The UK has specific bilateral IHT/estate tax double taxation conventions with a limited number of countries. As of 2026: USA (the most important — covers estate tax on assets in both countries); India; Pakistan; France (covering assets located in both countries); Italy; Netherlands; South Africa; Sweden; Switzerland; Ireland (Estate Duty Convention, now of limited effect following abolition of Irish inheritance tax and replacement with CAT — Capital Acquisitions Tax). Note: many of these treaties are old (some dating to the 1940s-1960s) and may not fully align with current IHTA 1984 provisions. The UK and USA treaty is the most frequently used — American citizens with UK assets, or UK-domiciled people with US assets, benefit from this. For countries not on this list (e.g. Australia, Canada, UAE, Germany, Spain), only unilateral relief under s159 is available.
How does unilateral double taxation relief under s159 IHTA 1984 work?
Unilateral relief under s159 IHTA 1984 gives a credit against UK IHT for qualifying foreign tax paid on the same assets. The credit is the lower of: (a) the foreign tax attributable to the asset; or (b) the UK IHT attributable to the same asset (calculated as a proportion of total IHT × (foreign asset value / total chargeable estate)). Example: A UK-domiciled deceased has Australian shares worth £200,000 in a total estate of £1,000,000. UK IHT at 40% on £675,000 above NRB = £270,000. IHT attributable to Australian shares = £200,000/£1,000,000 × £270,000 = £54,000. If Australia charged AUD$60,000 (approximately £35,000) on the shares, the credit is £35,000 (the lower amount). UK IHT payable on Australian shares reduces to £54,000 - £35,000 = £19,000. The credit cannot exceed the UK IHT on the same assets — it cannot create a repayment.
How is double taxation relief claimed on IHT400?
DTR is claimed on the IHT account — Form IHT400 Schedule IHT417 (Foreign Assets). The executor must: (1) List all foreign assets on IHT417 — description, country, value in sterling (converted at date of death); (2) State the foreign tax paid or payable on each asset — provide the foreign tax assessment, demand, or calculation; (3) Calculate the DTR credit using the lower-of formula (s159); (4) Reduce the UK IHT payable accordingly on IHT400 box 85. HMRC may ask for evidence of the foreign tax paid — obtain a copy of the foreign tax return, assessment, or receipt before claiming. Exchange rate to use: HMRC accepts the average exchange rate for the tax year or the spot rate at the date of death — use whichever is more favourable and state which rate has been used.
Does DTR apply to the 'situs' of assets — and what is situs for IHT purposes?
DTR applies to foreign-sited assets that are caught by both UK IHT (because the deceased is UK-domiciled) and a foreign death tax (because the asset is located abroad). The 'situs' rules for IHT (which country an asset is 'in') are partly statutory and partly case law: land is situated where it is physically located; company shares are situated where they are registered (not where the company trades); debts are situated where they are recoverable; bank accounts are at the branch where the account is maintained; life policies are generally where they are enforceable; pension death benefits follow the rules of the governing trust. The situs rules matter because: for non-doms, only UK-sited assets are within scope; for DTR, you need to establish that the asset is sited in the foreign country for foreign tax purposes, and also within scope for UK IHT. Where the two countries disagree on situs, both tax without credit — a true double tax scenario that specialist advice is needed to resolve.
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