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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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End of instalment option: underwriting interests

Underwriting interests (IHTM18112) qualify for the payment of tax by interest free instalments (IHTM30363) until such time as the interest is realised. At least three years and possibly four years may elapse before the personal representatives (IHTM05012) can realise the interest fully.

In view of IHTA84/S227 (6)(b) any payment made on account of the interest is to be treated as a sale bringing the instalment facility to an end proportionately. In practice, you may ignore intermediate payments unless the taxpayers themselves report them and invite assessment.

It is, however, important that the instalment facility should not be allowed to continue, by oversight, beyond the date of realisation. Accordingly Shares and Assets Valuation will, when notifying you of the value agreed, either say that the instalment option is no longer available or, if agreement is reached before the final figures are known, give an appropriate date on which the option will cease. You should ascertain from the taxpayers or their agents the date on which payment was received and assess accordingly.