IHTM04315 - Finance (No 2) Act 2017 changes: double taxation arrangements
There are provisions for the application of the new measure to double taxation arrangements (IHTM27161). These give the UK taxing rights, irrespective of the terms of the treaty, where either no tax is charged in a non-UK territory on a transfer of value, or there is such a tax听and its effective rate is 0%.听
Example 1听
Mohand听is Indian born and has an Indian domicile (to 5 April 2025 or is not a long-term UK resident after then).听His main home is in Mumbai. He owns a 拢5m residential property in Surrey through a Jersey company all of听whose shares he owns. The company has no other assets or liabilities. It has a value of 拢5m. Mohand听dies. The UK/India Double Tax treaty gives taxing rights to India, but no tax is charged. The UK charges Inheritance Tax (IHT) on the full 拢5m value attributable to the UK property.听
Example 2听
Before 6 April 2025听
Nadine is a farmer and is domiciled听in Iowa (to 5 April 2025 or is not a long-term UK resident after then).听She is not a UK national. Her 拢1m house in the Scottish highlands听is held via an offshore company. She dies in the USA. The USA has taxing rights听but the value of her estate is below the threshold and there is no tax paid in the USA. The UK charges IHT on the value of the shares that is attributable to the UK property.바카라 사이트�听
However, if her estate were charged to US Federal Estate Tax then the UK바카라 사이트檚 charge to IHT is denied by the UK/US Convention. This would also be the case where there was no US tax payable because of a specific relief, such as the special land use valuation for farm assets.