Inheritance Tax Act 1984 Schedule A1 paragraph 7

Double taxation relief arrangements

Paragraph 7 ensures that double taxation treaties with foreign governments cannot be used to avoid inheritance tax charges on overseas property that derives its value from UK residential property.

• Double taxation relief arrangements with foreign territories cannot override the inheritance tax charges imposed by paragraphs 1 and 5 of Schedule A1 on overseas structures holding UK residential property.
• This override applies where the foreign territory either does not charge any tax similar to inheritance tax on the relevant transfer, or charges such a tax at an effective rate of zero per cent (other than as a result of a specific relief or exemption).
• The effective rate is calculated by expressing the foreign tax actually charged as a percentage of the value on which it is charged.
• Double taxation relief arrangements are those that have effect under section 158(1) of the Inheritance Tax Act 1984, which governs double taxation conventions agreed between the UK and other governments.