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HMRC internal manual

Inheritance Tax Manual

Calculating the transferable nil rate band: interaction of ability to transfer unused nil rate band with double taxation conventions, double taxation relief and successive charges relief

The extent to which an estate is chargeable to tax may be governed by a double taxation convention (IHTM27161), or a liability to tax may be reduced to nil by double taxation relief (IHTM27181) or successive charges relief (IHTM22041).

Where under the terms of a double taxation convention an asset is not subject to tax, then if this means that the chargeable estate is below the nil rate band, the amount unused is available for transfer.

However, where there is a liability to tax that is reduced to nil by either double taxation relief or successive charges relief, the nil rate band remains fully used. We do not repay any ’excess’ relief and ‘excess’ relief cannot be converted into unused nil rate band.