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HMRC internal manual

Inheritance Tax Manual

Transfers on death: meaning of 'unquoted' for instalments

The meaning of the term ‘unquoted’ for instalment purposes has not been constant and has diverged from the general definition provided by IHTA84/S272 as introduced by the FA 1987 with effect from 17 March 1987.

With effect from 1 April 1996 the word ‘quoted on a recognised stock exchange’ in IHTA84/S227 (1AA) and in IHTA84/S272 was replaced by the word ‘listed’. The term ‘recognised stock exchange’ was defined by TA88/S841, but with effect from 28 November 2001 HMRC adopted a revised interpretation. See IHTM18331 for details of whether shares on certain widely used markets are regarded as listed or not.

With one exception the point will rarely arise since, with effect from 1 April 1996, all unquoted shares will qualify for 100% Business Relief unless they fall within IHTA84/S105 (3). If they fall within that section, or are as described in IHTA84/S105 (4) (see IHTA84/S234 (2) and IHTA84/S234 (3)(a)), they will only qualify for interest free (IHTM30363) instalments to the extent that the value is treated as reduced by Agricultural Relief (IHTM24000).

The exception is where the unquoted shares would have qualified for 100% Business Relief but for the provisions of IHTA84/S106, i.e. they were not owned by the transferor throughout the two years immediately preceding the date of transfer. In this case the shares will qualify for interest free instalments.