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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Foreign property: valuation of assets: deduction for administration of non-UK assets

IHTA84/S173 says that an allowance shall be made against the value of the property outside the UK for the additional costs of administration or realisation of the property which are attributable to it being situated outside the UK.

This allowance is restricted to the lower of:

  • the additional foreign expenses; or
  • 5 per cent of the value of the property.

The allowance is for additional expenses only. So it is only allowed on the excess of the expenditure over and above which it would have cost to deal with the property in the UK. The cost of obtaining a foreign grant is allowed but not the cost of reporting the death of a deceased shareholder with a foreign company. If worthwhile you must ask for details of the expenses and point out, if necessary, that the allowance is for additional expenses only and restricted to 5 per cent of the value. When the deduction is agreed, calculate the net value of the asset and refer to Shares and Assets Valuation (Foreign) to convert if the value shown in non-Sterling currency.