IHTM33131 | Loss on sale of land: changes in the interest or underlying land: leases
From HM Revenue & Customs · Inheritance Tax Manual
You must make an addition to the sale price () where the interest is a leasehold with not more than fifty years to run at the date of death, .
The amount of addition is the ‘appropriate fraction’ of the value on death () of the interest in land. The appropriate fraction is:
(P1 - P2) ÷ P1
Where:
P1 is the percentage derived from the table () in for the duration of the lease at the date of death, and
P2 is the corresponding percentage derived from the table in for the duration of the lease at the date of sale ().