SVM108210 | Inheritance Tax: ‘Package’ Valuations

Where:

• a deceased or lifetime transferor was a controlling shareholder of a company (taking into account any related and settled shares) and their ‘estate’ also included land (or an interest in land) let or leased to the company, or

• a controlling shareholding in a company and land let to that company were comprised in the same non-interest in possession settlement

the land and shares may have to be valued on the assumption that they would be sold together.

The principal effect of any such ‘packaging’ is to enhance the value of the freehold interest rather than affect the value of the shares.

This instruction applies both to agricultural and other land and whether or not the land is itself chargeable to tax. Most commonly, however, ‘package’ situations do involve agricultural land and the upshot of treating the valuation in this way may be to give agricultural relief at the higher rather than the lower rate on the let land.

If the land is being considered with a vacant possession value, there will be no package valuation implications. However, if the value returned reflects the tenancies, copies of the documents, together with details of how long the company has been in occupation, the rents paid and whether the freeholder makes any contribution towards rent and rates should also be considered.

Additional Guidance: SVM150000