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HMRC internal manual

Inheritance Tax Manual

Related property: introduction

There are special rules for valuing property (IHTM04030) that is included in an estate (IHTM04029) if there is other property that is ‘related’ to it, IHTA84/S161. The rules apply where, if by valuing the property together, you get a higher value than by the normal method of valuation.

Broadly speaking, related property (IHTM09733) is property that is in

  • in the estate of a spouse/civil partner (IHTM11032), or
  • belonging to a charity or one of the political, national or public bodies to which exempt transfers may be made.

The rules apply to both lifetime transfers and transfers on death.

If property in the death estate is valued by the related property rule and is then sold for a lower amount (IHTM09751) within 3 years of death, the taxpayer may be able to claim relief, IHTA84/S176.