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HMRC internal manual

Inheritance Tax Manual

Related property: property owned jointly by husband and wife, or civil partners

The following are situations where the related property rules (IHTM09732) may apply to property (IHTM04030) owned jointly by a husband and wife, or civil partners (IHTM11032).

Real, heritable or leasehold property

The related property rules apply because the interests of the spouses/civil partners are together worth more than the sum of their separate interests – the separate interests would normally be subject to a discount for joint ownership. The interests of the husband and wife, or civil partners, will normally be identical and will extend to the whole of the land and property so the value of the deceased/transferor’s interest will be the appropriate proportion of the entirety value.

If the transfer of the interest is a chargeable transfer you should tell the VOA (IHTM23002) when completing the VOA 1 or VOA 2 (IHTM23206) that

  • the related property provisions apply
  • the entirety value is to be provided (and, if the property was occupied by the spouses/civil partners, to value it with vacant possession).

The rules do not apply where a deceased’s interest in the jointly owned property passes to the other spouse or civil partner as the survivor in a joint tenancy, as spouse or civil partner exemption (IHTM11031) will apply.

Property let to a partnership

Similar principles to those above apply.

Where the property is

  • solely owned by the husband, wife or civil partner or owned by them jointly, and
  • was let or leased to a partnership of which the spouses/civil partners were the only partners

you should, if 100% business relief (IHTM25000) is not available, advise the VOA that

  • the related property provisions apply, and
  • the value the entirety of the property with vacant possession.