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HMRC internal manual

Inheritance Tax Manual

Lifetime transfers: specific lifetime reliefs: shares and securities: capital receipts

If the transferred asset consists of shares and, between the date of transfer and the date of death or sale, the transferee (or their spouse or civil partner (IHTM11032)) has become entitled to receive

  • a capital payment in respect of the shares (money or money’s worth which does not constitute income for Income Tax purposes), or
  • consideration for the disposal of rights consisting of a provisional allotment of shares (usually a rights issue but not a bonus issue) in respect of the shares transferred

increase the market value of the shares at the date of death or sale by the amount received.


Bernice transfers 1,000 shares in ABC Plc to her son Marcus on 1 March 2012. The shares were valued at 700p per share so the value transferred was £7,000.

On 1 November 2012 there is a rights issue of 1 share for every 5 at 550p per share. Marcus sold the rights for £300. Marcus then sold the shares for £6,000 on 1 February 2013. Bernice died on 1 July 2013 and Inheritance Tax (IHT) is payable on the gift of the shares.

For fall in value relief the value of the shares at the date of sale is £6,300 (£6,000 + £300). The fall in value is £700.