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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 taxÌýand its effective rate is 0%.Ìý

Example 1Ìý

MohandÌýis Indian born and has an Indian domicile (to 5 April 2025 or is not a long-term UK resident after then).ÌýHis main home is in Mumbai. He owns a £5m residential property in Surrey through a Jersey company all ofÌýwhose shares he owns. The company has no other assets or liabilities. It has a value of £5m. MohandÌýdies. 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 £5m value attributable to the UK property.Ìý

Example 2Ìý

Before 6 April 2025Ìý

Nadine is a farmer and is domiciledÌýin Iowa (to 5 April 2025 or is not a long-term UK resident after then).ÌýShe is not a UK national. Her £1m house in the Scottish highlandsÌýis held via an offshore company. She dies in the USA. The USA has taxing rightsÌýbut 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. Ìý

However, if her estate were charged to US Federal Estate Tax then the UK’s 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.