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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Bank and building society accounts: valuing entitlements arising from take-overs, mergers and flotations of building societies and other mutual organisations

If the deceased had an interest in an account in a bank or building society that was the subject of a take-over, merger or stock market flotation that happened close to the date of death there may be additional points to consider.

Take-overs, mergers and flotations may result in investors or borrowers gaining cash bonuses or shares if they are ‘qualifying members’. Whether they qualify or not will depend on the terms of each particular take-over, merger or flotation

If a qualifying member dies on or after the completion or vesting day the cash or shares allocated to that person will form part of their estate. If a qualifying member dies after the transfer document and prospectus have been issued but before the vesting date the value of their share in the society, at the date of death, is increased to reflect anticipated or preserved rights. The value of that share is what is due or received, but allowing an appropriate discount to reflect any uncertainty or delay in receiving the distribution that is due.

A qualifying member generally includes investors and borrowers so it is important to look out for mortgage debts as well as investment accounts with the Societies concerned.

Our practice of including a value for a person’s preserved rights has been upheld by the Special Commissioners in the case of Ward and others (executors of Cook, deceased v IRC 1999 STC 1)