IHTM23173 | Special valuation matters: benefit of building contracts
From HM Revenue & Customs · Inheritance Tax Manual
Where it is known that
the deceased had entered into a binding contract for work to be done on his property, and
at the date of death the work had not been completed
you should
inform the Valuation Office Agency (VOA) () accordingly, and
indicate the cost of the work, where known.
The VOA's opinion of value () should reflect
the benefit of all work to be done under the contract, but
without deduction for payment to be made under the contract.
The payments to be made under the contract will therefore be deductible as liabilities () of the estate.