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HMRC internal manual

Inheritance Tax Manual

Special valuation matters: jointly owned land sold under a binding contract entered into after the death

These instructions only apply to joint property (IHTM15011) where the contract for sale was entered into after the death. Different instructions apply for where the contract was entered into before the death (IHTM23186) but completion did not occur until afterwards.

Whilst, with contracts for sale of land entered into after the death where the share of the property to be valued is the whole, it is often possible to use the sale value without reference to the VOA (IHTM23002), jointly owned land where the deceased’s entitlement is a fractional share requires a different approach. This is because a discount will apply for joint ownership as the valuation event is the ‘moment before death’, at which point in time the land was jointly owned. We do not value property with hindsight by having regard to the fact that a sale was subsequently achieved without recognising the fact of joint ownership.

It is up to the VOA to decide what the appropriate discount is in each case. Therefore you should still refer cases where the deceased’s entitlement was a fractional share in joint property to the VOA where there has been a sale as a result of a contract entered into after the death. The only exception to this will be where, by virtue of the related property (IHTM09731) provisions, the share to be valued is a whole share – in that case you may proceed per the instructions on sales of entirety shares (IHTM23185), as no discount for joint ownership would be due.

When referring a fractional share to the VOA where there has been a binding contract for sale entered into after the death, you should make sure that the VOA is provided with all the information on the sale that you have as this will help him decide the level of the discount. You should also tell the VOA to have regard to the circumstances at death by what may be evidenced shortly afterwards - the fact that the joint owners, collectively, were willing to sell. As one area for potential disagreement between the joint owners has been removed, the relevant discount might be lower than the situation where agreement to sell was not overtly evident.