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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Lifetime transfers: specific lifetime reliefs: fall in value relief: what is a qualifying sale?

When a claim for fall in value relief is made in connection with the sale of a gifted asset you need to make sure that the sale price was the best price that the seller could reasonably get. For fall in value relief this is known as a qualifying sale. Under the provisions of IHTA/S131(3), a sale is only a qualifying sale if:

  • it is at arm’s length for a price freely negotiated at the time of the sale, and
  • no person selling the asset (or having an interest in the proceeds of the sale) is the same as or connected with the purchasers of the asset (or having an interest in the purchase), and
  • no provision is made, in or in connection with the agreement for the sale, that the seller (or any person having an interest in the proceeds of sale) is to have any right to acquire some or all of the property sold or some interest in or created out of it.

If the sale is clearly a straightforward arm’s-length transaction and none of the above complications are indicated, you can accept that the sale is qualifying.