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HMRC internal manual

Inheritance Tax Manual

Foreign property: Double Taxation Relief: procedure for relief by concession on shares

Occasionally, shares in a company situated in some part of the UK by UK law, are also treated as liable to tax in a foreign country on the grounds, for example, that the company carries on business there. In this circumstance, by concession, the amount of foreign tax is allowed as a deduction against the value of the shares. This concession operates whether the company is incorporated in the UK or elsewhere.

The concession applies in the same way where the obligation to pay foreign tax on death falls upon the company and the company has the right to be reimbursed by the personal representatives of the deceased shareholder before it registers a transfer of the shares.

The concession does not apply to cases covered by the statutory reliefs provided for by IHTA84/S158 and IHTA84/S159. Nor does it apply to shares that become liable to the foreign tax by reason of the operation of a double taxation convention to which the UK is not a party.

In certain circumstances, concessionary relief against the value of property is allowed in respect of taxes payable in the Republic of Ireland (IHTM28101) and in Canada (IHTM28102).