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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Valuation: open market value

The general rule for inheritance tax purposes is that the value of any property (IHTM04030) is the price it might reasonably be expected to fetch if sold in the open market at that time, IHTA84/S160. This is usually referred to as the ‘open market value’. What we mean by this is discussed more fully at IHTM09704. The costs incurred in making the sale are not reflected in the open market value of an asset.

The legislation also states that the value of an asset should not be reduced where the quantity to be valued is so great that if it were all to be sold at the same time it would fetch a lower price that a smaller quantity, IHTA84/S160. For example, if the substantial shareholdings of a director of a quoted company were all sold at the same time the sale might flood the market and decrease the price. But this is ignored and no decrease allowed when we value a substantial shareholding on, say, the death of director.

The fact that because of some restriction (IHTM09771) an item of property may not be sold does not prevent it being valued under IHTA84/S160.