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HMRC internal manual

Inheritance Tax Manual

Special valuation matters: property subject to an enforceable right of occupation by a third party

Where property owned by the deceased

  • is occupied rent free by someone else (for example his separated or divorced wife) for life or so long as that person wishes, and
  • the occupation is under an enforceable order or agreement

you should

  • ask the VOA (IHTM23002) to report the principal value of the property with vacant possession at the date of death
  • ascertain the age of occupier

and then

  • refer the question of value of the deceased’s interest to the Boards Actuarial Officer (BAO).

Where the advice of the BAO has been obtained a note of the final outcome of the case should be sent to the BAO for record purposes. There is no need to refer the file.

Different instructions (IHTM23201) apply where there is no enforceable order or agreement but the taxpayer claims that there was an enforceable right of occupation.