Inheritance Tax Manual

Appendix 28: related property

The Valuation Office Agency's (VOA) technical manual relating to Inheritance Tax.

Valuation example demonstrating the application of Section 161 IHTA 1984.


The precise mathematical calculation of the appropriate portion of the aggregate value attributable to the transferor’s estate is carried out by HMRC(IHT), in accordance with the formula, based on the DV’s valuations of:-

A the aggregate of the transferor’s and the spouse’s or civil partner’s related property;

T the transferor’s property as if not part of that aggregate; and

R the related property as if not part of that aggregate.


A house stands in 10 acres of parkland, which together are valued at £1,500,000. The transferor owns the house, whilst her spouse owns the surrounding parkland (the related property).

Calculation of value of wife’s interest in the house on death (or the occasion of a chargeable lifetime transfer)

A Aggregate value of the entirety with vacant possession is £1,500,000.

T Value of transferor’s interest in the house if not part of the aggregate:

say £1,200,000 (i.e. what the market might pay and not the arithmetical proportion)

R Value of husband’s related interest in the parkland as if not part of the aggregate:

say £50,000

Appropriate portion of the value of the aggregate attributable to the transferor’s interest in the house: