Valuation of joint property: valuation
The valuation of joint property is usually the same as that for other assets (IHTM09701) although there are certain special aspects. However, the taxpayers or their agents may seek a discount (IHTM15072) saying that the value of a share is less than the arithmetic proportion of the whole.
When considering how to value joint property you should remember that the claim for Inheritance Tax is on the deceased’s estate (IHTM04029) and that ‘estate’ is the aggregate of all property. This means that two or more fractional shares of the same property in the estate must be valued together. In the case of land of any sort and certain other assets (for example, a pair of Purdey shotguns, a full set of Spy cartoons or a pair of Ming vases), the value of the whole is greater than the value of individual parts. The value of unlisted shareholdings in a private company will also generally be greater when added together than if they were treated independently.
Alan dies owning a half share of Longacre as part of his free estate. Alan also had a life interest in a settled fund that contained the other half share of Longacre.
Longacre must be valued as a whole and not as two half shares.
When assessing (IHTM31000) the Inheritance Tax the aggregate value should be split in the appropriate respective proportions. In the example above, this would be 50% to the free estate and the other 50% to the settled property.
In this context ‘estate’ does not include excluded property (IHTM04251) as set out in IHTA84/S48. But the definition of ‘estate’ here does include exempt (IHTM11000) property for valuation purposes. So the value of the combined share must be taken into account.
Andrew dies holding a half share of The Gallops as free estate. Andrew also has a life interest under the Will of Barbara, his wife, who died before him. That interest is exempt under IHTA84/SCH6/PARA2. The other half share of The Gallops is an asset of the exempt Will Trust.
The valuation of The Gallops should be of the entirety. 50% of the entirety will be assessed on the value of the half share in the free estate. The 50% relating to the ‘exempt’ part is left out of account.
When two of the co owners of joint property are a married couple or civil partners and one dies then that joint property is related property (IHTM09731). If the transfer is chargeable, you must adopt aggregated values and apply the related property provisions (IHTM09731), but you should also be aware of the special rule (IHTM09737).
Mr and Mrs Allsop each own 40% of the voting shares in a private unlisted company. On the death of Mr Allsop, Shares and Assets Valuation will value an 80% holding. The chargeable figure will be half the value agreed for the 80% holding.