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HMRC internal manual

Inheritance Tax Manual

Lifetime transfers: specific lifetime reliefs: interests in land: changes that have increased the value

If the change has the effect of increasing the value of the transferred land, you value the property at the date of death or sale for the purpose of the relief as if the change had not taken place in accordance with IHTA/S137(4).


After the transfer of land then worth £100,000, the transferee builds a house on it. At the date of the transferor’s death the land, with the house, is worth £250,000 but without the house its value would have been only £80,000.

For relief purposes, the value of the land at the date of death is taken as £80,000, so the relief due is £20,000 (£100,000 less £80,000).