IHTM34245 | Attribution of values to specific investments: example of how values are revised under IHTA84/S187(3)

At the date of death, the deceased owned qualifying investments in four companies, Ash, Beech, Cedar and Elm plc. The personal representatives sold all the shares within 12 months of the death. The values on death and at the date of sale, together with the losses or gains made are as follows:

• 2,000 shares in Ash, valued at £2,000 on death, sold for £1,600, a loss of £400.

• 1,500 shares in Beech, valued at £2,200 on death, sold for £2,400, a gain of £200.

• 1,000 shares in Cedar, valued at £5,000 on death, sold for £4,000, a loss of £1,000.

• 500 shares in Elm, valued at £2,000 on death, sold for £2,000, no gain or loss.

The total value at death was £11,200 and the total sale value is £10,000, giving a net loss of £1,200.

The personal representatives purchased £5,000 of qualifying investments in the period between the date of death and two months after the date of the last sale.

Because of IHTA84/S180 the loss on sale is reduced by the relevant proportion (IHTM34212)

(£5,000 ÷ £10,000) x £1,200 = £600

The loss on sale relief is therefore reduced to £600 (£1,200 - £600).

The revised value of the shares in Ash is £1,600 plus an amount equal to the relevant proportion of the difference between the value on death and the sale price,

which is £1,600 + [(£5,000 ÷ £10,000) x £400] = £1,800.

The revised value of the shares in Beech is £2,400 less an amount equal to the relevant proportion of the difference between their value on death and the sale price,

which is £2,400 – [(£5,000 ÷ £10,000) x £200] = £2,300.

The revised value of the shares in Cedar is £4,500, calculated in a similar way as for Ash.

There is no change in the sale price for Elm.