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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Transfers on death: valuing property together

The definition of a person’s estate (IHTM04029) is the aggregate of all property (IHTM04030) to which a person is beneficially entitled, (IHTM04031) except that the estate of a person immediately before his death does not include excluded property. (IHTM04251)] This means that in valuing an estate, items of property may be taken together, even if held under separate titles and whether or not all the various parts of the estate are chargeable to tax, see IHTM04331.This aspect of valuation applies mainly to unquoted shares, to interests in land, undivided shares of property and ‘sets’ such as a herd of pedigree cattle or an art collection.


The deceased owns a half share of a house with the other held by the trustees of settlement in which the deceased has a life interest. The house is worth £200,000 with each half share valued at £90,000. The deceased is beneficially entitled to the whole of the house so the full £200,000 is charged to tax, with each half share valued as an arithmetic share of the whole.

It is often said that in order to sell either half share, the co-operation of the other joint owner is required and so a discount should be allowed to compensate for the uncertainty involved. Whilst in reality this may be true, for IHT purposes the statute imposes the hypothesis that the deceased is beneficially entitled to the whole and it is the whole that is valued in accordance with IHTA84/S160. If tax is only chargeable on a fractional share (because, say the other share is exempt) it is the arithmetic proportion that is taxed and not the value of the share involved.