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HMRC internal manual

Inheritance Tax Manual

End of instalment option: meaning of 'sold'

The HMRC Solicitor has advised that in the context of IHTA84/S227 (4) a sale is an exchange for money. It follows that where tax is being or may be paid by instalments, the facility is not lost where

  • unquoted shares or securities (IHTM18131) become quoted on a recognised stock exchange or listed on AIM (IHTM18331)
  • unquoted shares or securities are exchanged for other shares or securities, whether quoted or not, (a situation which often arises on the take-over or merger of companies)
  • a distribution in cash is made to shareholders on a liquidation, which is not an exchange but the winding up of a company
  • the instalment option property is mortgaged or charged as security for a loan
  • a business (IHTM25051) is incorporated and the consideration for the business is shares or securities in the new company.

Where there is a disposal of instalment option property partly for money and partly for other property, a proportion of the unpaid tax becomes immediately payable. The proportion is that which the money bears to the total consideration. If the disposal was plainly an arm’s length transaction and the amount of the total consideration stated, the relevant proportion should be adopted. 

Where the shares in a) above or, in the situations in b) and e) above, the shares received in exchange are subsequently sold, the instalment facility comes to an end on the sale.  Any question or dispute as to the ending of the facility in these circumstances should be referred to your manager.

Shares and Assets Valuation notify the appropriate division where the taxpayers have elected to pay tax on shares by instalments and it comes to light that the shares have been sold or exchanged partly for money and partly for shares.


The date of sale is normally the date of completion, i.e., when the exchange of money actually occurs.  However, if a substantial deposit is paid or the completion is in stages or delayed, please refer to your manager.