Double taxation relief for inheritance tax

When the UK and another country both tax the same asset on the same death or gift, the UK gives relief in one of two ways. If the country is one of the 10 with an inheritance tax treaty, the treaty decides which country taxes and which gives credit. For every other country, section 159 of the Inheritance Tax Act 1984 gives a unilateral credit for the foreign tax, never more than the UK tax on that asset.

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Why can the same estate be taxed twice?

UK inheritance tax reaches the worldwide estate of a long term UK resident, and the UK assets of everyone else. Other countries use their own tests: where the asset is, where the deceased lived, or where the heirs live. A UK resident with a holiday home in Spain, or an American citizen living in London, can therefore face two charges on the same property. HMRC’s manual at IHTM27160 explains that relief can come either from the UK allowing a credit for the foreign tax, or from the other country allowing a credit for UK tax.

Who is in scope for UK tax in the first place is covered in long term residence and inheritance tax.

Which countries have inheritance tax treaties with the UK?

Section 158 allows the government to make double taxation conventions for inheritance tax. HMRC lists conventions with 10 countries at IHTM27161: the Republic of Ireland, the Netherlands, South Africa, Sweden, the United States, Switzerland, France, India, Italy and Pakistan. They fall into two groups:

Post 1975 conventions (Ireland, South Africa, the USA, the Netherlands, Sweden and Switzerland). Since 6 April 2025 a long term UK resident is treated as domiciled in the UK for these treaties. HMRC notes at IHTM47071 that Sweden abolished its inheritance and gift tax on 31 December 2004.
Pre 1975 conventions (France, Italy, India and Pakistan). These were made for estate duty and still work by reference to a person’s common law domicile, not long term residence. They cover tax on death only, not lifetime gifts. HMRC records that inheritance tax was abolished in India in 1985 and that Pakistan has no inheritance, estate or gift taxes.

Under section 267ZF(3) and (4), a person treated as UK domiciled or long term resident only because of an election is not treated that way when applying any of the treaties.

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How does a treaty decide which country taxes?

Each treaty is different, so the text of the relevant one must be read. In general a treaty gives primary taxing rights to one country, often the country of fiscal domicile or the country where immovable property is situated, and requires the other to give credit or give up its claim. Where both claim domicile, a tiebreaker applies.

Two examples from HMRC’s guidance show the range. Under the French convention, if the deceased had a fiscal domicile in France, the UK must waive its tax on assets treated as situated in France under the treaty’s situs code. Under the US convention, a person counts as domiciled in the US if they were a resident or national of the US at any time in the preceding three years. HMRC’s example at IHTM27200 is Giles, a long term UK resident who owned a New York apartment, US shares and a New York bank account: US federal estate tax applies only to the apartment and the UK gives treaty credit for it, while New York State estate tax on the other assets attracts unilateral relief because the treaty does not cover it.

What happens if there is no treaty?

Section 159 gives unilateral relief for any foreign tax that is similar in character to inheritance tax, or is charged by reference to death or lifetime gifts, where both taxes arise on the same event and are attributable to the same property. HMRC’s rules at IHTM27185 are:

the credit is the sterling equivalent of the foreign tax, converted at the exchange rate on the date it was paid;
interest, penalties and tax on income arising after the transfer are excluded;
the credit cannot exceed the UK inheritance tax charged on that item of property.

How much credit is given depends on where the asset is situated under UK law:

Where the asset is situated	Relief
In the foreign country only	Credit equal to the foreign tax, capped at the UK tax on the asset (section 159(2))
In both countries, or in neither	Split credit A ÷ (A + B) × C, where A is the UK tax, B the foreign tax and C the smaller of the two (section 159(3))
In the UK and not in the foreign country under its own law	No relief

HMRC’s split credit example has the UK charging £60 and another country £40 on an asset situated in neither, giving a credit of £24. Where both treaty relief and unilateral relief seem to apply to the same property, section 159(7) restricts relief to the greater of the two.

How does the credit work in a real case?

HMRC’s own example at IHTM27187 uses older figures. Bernice died leaving an apartment in Spain worth £50,000 within a total estate of £300,000, with no lifetime gifts. The total UK tax was £20,000 and Spain charged the equivalent of £4,000 on the apartment.

UK tax attributable to the apartment: £50,000 × (£20,000 ÷ £300,000) = £3,333.33.
The apartment is situated in Spain, so section 159(2) applies, but the credit is capped at £3,333.33.
The remaining £666.67 of Spanish tax is not relieved, because the UK never refunds more than its own tax on the asset.

How is relief claimed?

The executors claim the credit on form IHT400. Where the deceased had a permanent home in the UK and assets abroad, form IHT417 lists those foreign assets. HMRC may allow the credit provisionally but will not finalise it until it sees proof that the foreign tax has been paid:

Ireland: a letter from the Revenue Commissioners’ CAT Unit confirming the tax, the property, the payment date and that the tax is final.
United States: Form 742 certified by the Internal Revenue Service.
France: form No. 50 certified by the French authorities.
Italy, Switzerland and countries without a treaty: the foreign assessment showing the assets and values taxed, and evidence of payment such as an official receipt.

Once UK tax has been paid, HMRC will not make an interim repayment. Under section 241(1) tax is only repaid when an overpayment is proved. HMRC can also issue certificates of UK tax paid for the other country’s authorities. The general approach to completing the IHT400 still applies.

Does relief affect the nil rate band?

It can. HMRC explains at IHTM43025 that if a treaty takes an asset out of the UK charge, so that the chargeable estate is below the nil rate band, the unused part can pass to a surviving spouse or civil partner. But if UK tax is charged and then reduced to nil by a credit, the nil rate band is treated as fully used, and excess credit cannot be turned into unused band. See transferring the unused nil rate band.

Foreign taxes that are not similar to inheritance tax, such as a capital gains charge on death, do not give a credit. HMRC says at IHTM28100 that they can usually only be deducted from the value of property in the country that imposes them, with exceptions including Irish tax debts and Canadian income tax on the deemed disposal at death.

What mistakes come up?

Assuming the income tax treaty with a country also covers inheritance tax. Only the 10 listed conventions do; see how double tax treaties work.
Expecting full relief for foreign tax that is higher than the UK tax on the same asset.
Claiming credit on a UK situated asset that the other country taxes only because of where the heir lives.
Applying the long term residence test to France, Italy, India or Pakistan, where common law domicile still governs.
Asking for a repayment before the foreign tax is final and certified.

Beneficiaries in the UK receiving foreign assets should also read UK tax on an inheritance from abroad.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.