Transfers on death: unquoted shares - £20,000 value and 10% nominal value test
Unquoted shares (but not securities) that do not represent a control holding (IHTM30217) of a company qualify for instalments if both the following conditions are satisfied:
- so much of the value transferred by the chargeable transfer ‘as is attributable to the shares exceeds £20,000’ and
- the nominal value of the shares is not less than 10% of the nominal value of all the shares of the company at the time of the transfer, or
- the shares are ordinary shares and their nominal value is not less than 10% of the nominal value of all the ordinary shares of the company at the time of the transfer.
‘Ordinary Shares’ are defined as shares which may carry either
- a right to dividends not restricted to dividends at a fixed rate
- a right to conversion into shares carrying such a right to dividends.
The criteria for £20,000 value
The £20,000 value in the first condition refers to the value transferred by the chargeable transfer, not to the value of the shares. Accordingly the £20,000 test has to be applied to the value transferred so far as attributable to the shares after taking into account any appropriate exemptions and reliefs (but including, on chargeable transfer made on death, any addition for grossing up (IHTM26121)).
The criteria for the 10% test
Shares and Assets Valuation will advise whether a holding of shares satisfies the 10% test for instalment relief under IHTA84/S228 (1)(d) and (3).