Special valuation matters: joint property - valuation of a fractional share
Where the claim for tax is limited to a fractional share of joint property (IHTM15011), the Valuation Office Agency (VOA) (IHTM23002) is normally asked to value that share only, unless the related property (IHTM09731) provisions apply.
However, IHTA84/S5 provides that a person’s estate (IHTM04029) is the aggregate of all the property (except excluded property (IHTM04251)) to which he is beneficially entitled (IHTM04031). This includes any settled property in which he has an interest in possession under IHTA84/S49(1) (IHTM16061).
In view of IHTA84/S5 where two or more fractional shares of the same property are comprised in the estate you should instruct the VOA to value the aggregate of the shares.
Denise owned a one-half share of property forming part of her free estate.
She also had an interest in possession in settled property which included the other half share of the property.
In such a case, you should ask the VOA to value the entirety.
One-half of that entirety value is then attributed to each of the interests.
You should apply the instruction even though one of the shares may be exempt (for example because spouse or civil partner exemption (IHTM11031) applies) or where settled property is left out of account. (IHTM04331)
Similarly you should ask the VOA to value the entirety where the deceased owned the whole property and devised it by Will
- partly to an exempt beneficiary, and
- partly to a chargeable beneficiary,
Where the deceased occupied the property and his beneficial interest extended to the entirety you should instruct the VOA to value the entirety with vacant possession.
Refer any case to Technical where the taxpayer
- enquires about the way in which the VOA values fractional shares, or
- disputes or questions the basis of valuation of jointly owned residential property.