Qualifying property (PETs): unquoted shares or securities - £20,000 value and 10% nominal value
The two conditions are set out in the instructions relating to transfers on death (IHTM30220).
In their application to lifetime transfers, note the £20,000 value in the first condition refers to the value transferred by the chargeable transfer, which may well be different from the value of the shares transferred because of, for example, the loss to the estate (IHTM04054) concept or Business Relief (IHTM25131).
Note also that the value transferred is on the basis of no grossing up (IHTM14593), expressly confirming the position which necessarily flows from the first condition covering transfers and other events on or after 17 March 1987 (IHTM30241).
When a transferor transfers only part of their minority holding of shares, it is considered that the 10% nominal value condition has to be applied to the holding transferred, not to the transferor’s total holding immediately prior to the transfer.
Andrew, who owns 500 shares out of an issued capital of 3,000, transfers 250 shares. The loss to the estate is £50,000.
The £20,000 value transferred condition is satisfied. However, instalments are not available because the 250 shares transferred are less than 10 % of the issued capital. The fact that immediately prior to the transfer the transferor owned one-sixth of the issued capital is not relevant.