UK Ireland double taxation treaty for Inheritance Tax

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skray2000

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Dear Sirs
I live in the UK where inheritance tax is paid by the settler/estate. There is no tax liability for the beneficiary. For a single person without a direct descendent the tax is paid at 40% on worldwide assets that is in excess of the nil rate band of £325K.

My niece will be my beneficiary. She lives in Ireland where the beneficiary is responsible for paying Capital Acquisition Tax at 33%.

When she inherits my estate will she be able to claim relief for any inheritance tax paid by my estate in the UK on the basis of double taxation treaty between UK and Ireland? (The question is significant because the entity/person liable for paying tax is different in UK and Ireland)

Thanks in advance
Regards
 
This happened my husband when his father died. There was no UK tax due on the estate as it was under the threshold. However he had a very large CAT bill to pay in Ireland. We took advice and unfortunately there was no way round this.
 
skray2000 said:
Dear Sirs
I live in the UK where inheritance tax is paid by the settler/estate. There is no tax liability for the beneficiary. For a single person without a direct descendent the tax is paid at 40% on worldwide assets that is in excess of the nil rate band of £325K.

My niece will be my beneficiary. She lives in Ireland where the beneficiary is responsible for paying Capital Acquisition Tax at 33%.

When she inherits my estate will she be able to claim relief for any inheritance tax paid by my estate in the UK on the basis of double taxation treaty between UK and Ireland? (The question is significant because the entity/person liable for paying tax is different in UK and Ireland)

Thanks in advance
Regards
Click to expand...
I'm open to correction, but on the basis that your estate is >£325k and therefore has had UK IHT applied, she should be able to claim relief for Irish CAT under the double taxation agreement in place between both countries.

Double Taxation Relief (UK)

This page explains the Double Taxation Relief (UK) for Capital Acquisitions Tax (CAT)
www.revenue.ie www.revenue.ie
 
mct1 said:
This happened my husband when his father died. There was no UK tax due on the estate as it was under the threshold. However he had a very large CAT bill to pay in Ireland. We took advice and unfortunately there was no way round this.
Click to expand...
Hi mct1 - that is not the point. It is a general feature of international taxation that you pay the higher of 2 tax rates, in your case 0% and 33% respectively, hence effectively 33%. My concern was my estate pays 40%, then if my niece is not able to claim relief she pays 33%, so overall in the range of 73% (it will be less due to UK nil band rate and Ireland Group B exemption) . For example for simplicity assuming GBP and EUR are at par, lets say my estate is £1M. UK IHT = 40% of (1M-325K) = 270K. Ireland CAT= 33%of (1M-32K for Group B relatives)=320K. I do not want my niece to pay more that 320K. If she is not able to claim relief overall tax will be (325+270)=590K.
 
Your niece will be able to claim relief for the Estate tax paid by your estate against her CAT liability
 
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