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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Lifetime transfers - additional conditions: Replacement property (additional rule for shares or securities)

IHTA84/S113A (6) applies where shares which are owned by the transferee (IHTM25367) immediately before the death of the transferor (or the earlier death of the transferee) represent the original property received from the transferor.

The circumstances in which this subsection will apply are where the shares

  • can be identified with the original property under the provisions of TCGA92/S126 – TCGA92/S136 because, for example, they were received through reorganisation or reduction of the share capital, or as the result of a take-over bid, IHTA84/S113A (6) (a), or
  • were issued to the transferee in consideration of the transfer of business property consisting of the original property, IHTA84/S113A (6) (b).

Where either of these conditions apply, the shares are treated for the purposes of IHTA84/S113A as the original property.

You should refer any case where the taxpayer claims that shares come within IHTA84/S113A(6) (a) or (b) to Technical who will advise whether the shares come within this section.