IHTM27187 - Procedure with non-convention countries: relief under IHTA84/S159 (2)

Where the property concerned is situate (under uk law) in the foreign country, relief is due under IHTA84/S159 (2) and the credit due is equal to the foreign tax paid.

In practice, the credit cannot exceed the IHT attributable to the property concerned.

Example

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

The Spanish authorities charge tax equivalent to Sterling £4,000 on the apartment on B’s death.

The IHT payable on the apartment is:

£50,000 x (£20,000/£300,000) = £3,333.33

Accordingly, the double taxation credit due under IHTA84/S159 (2) is restricted to £3,333.33.