Personal Representatives can claim relief from Inheritance Tax if they sell quoted investments and/or land/buildings at less than their value at the date of death.

To obtain a Grant of Probate (or Letters of Administration in an intestacy), Personal Representatives generally have to pay any inheritance tax due first, subject to available reliefs. The value of the assets on which the inheritance tax is calculated is their open market value as at the date of death. If, however, quoted investments or land/buildings are subsequently sold for less than this value, a claim for inheritance tax loss relief might be possible.

For quoted investments, provided these are sold within twelve months of the death, and the requisite claim form is submitted to H M Revenue & Customs within five years from the date of death, the sale price can be substituted for the date of death value. Similarly, if the deceased’s land/buildings are sold within four years of the death, and the appropriate claim form is submitted to H M Revenue & Customs within seven years of the death, the sale price can again be substituted for the date of death value, subject to certain restrictions. In each case, the sale must have been made by the persons liable for the inheritance tax. A transfer of the assets to a beneficiary before they are sold, for example, would mean a claim for relief would then be unsuccessful.

A successful claim for loss relief will result in a reimbursement from H M Revenue & Customs for the inheritance tax overpaid, as if the inheritance tax had been calculated using the sale price and not the date of death value. This relief will no doubt continue to become more important if values fall.

For more information, please contact the partner having responsibility for your affairs, or any partner in the Private Client Department here.