IHTM47070 | Long-term UK residence test: Introduction to Double Taxation Conventions

From 6 April 2025 a person’s UK Inheritance Tax position will depend on whether they are a long-term UK resident (IHTM47000).

A double taxation convention between the UK and a foreign country may apply if a person is in scope for UK Inheritance Tax or its equivalent in the convention country. The UK currently has 10 double taxation conventions in place which have been negotiated between the fiscal authority in each country. (IHTM27161).

A double taxation convention seeks to eliminate double taxation by assigning taxing rights to one country or the other and, on occasions where both countries retain their right to tax the same assets, it determines which country will allow and apply a credit.

Where primary taxing rights cannot be established, a tiebreaker set out within the convention will be applied.

Each convention varies in its approach to eliminating double taxation and some only apply in respect of duty or taxes imposed on death whilst others also apply for charges imposed on other occasions i.e. lifetime transfers.

From 6 April 2025, where a double tax convention operates by reference to whether the UK treats a person as UK domiciled for Inheritance Tax purposes (deemed domicile), a person will be treated as UK domiciled if they are a long-term UK resident. Deemed domicile is relevant to some of the double tax conventions (IHTM47071) but not others (IHTM47072).

However, where a person is treated as domiciled or long-term resident in the UK for the purposes of Inheritance Tax because they have made a spousal domicile election (IHTM13040) or a long-term UK residence election (IHTM47031) this will be disregarded in applying any of the existing double tax conventions. (IHTA84/267ZF(3) and (4))