HMRC internal manual

Inheritance Tax Manual

IHTM33026 - Loss on sale of land: procedures: claims to substitute a higher sale value within three years of death

Occasionally you may receive a claim to substitute a higher sale price for the date of death value.

Cases where no IHT is due

In circumstances where no tax is due on the sold land because:

  • the chargeable estate is below the nil rate band, or
  • the sold land is exempt from tax, or
  • the sold land attracts 100% relief

You should deny the claim.

The grounds for denying the claim are that as there is no tax attributable to the value of the land, so there is no person liable to pay the tax in respect of that asset. If there is no liable person then there is no ‘appropriate person’ (IHTM33050) as defined by IHTA84/S190 (1). Only the appropriate person can claim the relief and if there is no such person then there cannot be an effective claim under IHTA84/S191. This view was upheld in the case of Stonor v IRC [2001] STC (SCD) 199.

When denying the claim, you should tell the person making the claim that this office has not considered the value of the relevant interests in land at the date of death for Inheritance Tax purposes. Accordingly the value has not been ascertained within the meaning of TCGA92/S274 and for Capital Gains Tax purposes they must calculate the chargeable gain on the disposal using the market value at the date of death. It is possible to check the valuation with the relevant Inspector of Taxes after making the disposal and before submitting the Self Assessment Return.

There is further information at CG16600. External customers can find this guidance at

Tax paying cases

In tax oaying cases a claim that simply seeks to replace a higher sale price, giving rise to additional IHT being due, may not be within the purposes of the relief. It is HMRC’s view that the purpose of IHTA84/s191 is to provide relief from Inheritance Tax.

This is because in the case of ‘Stonor’ the tribunal held that:

‘In considering the arguments of the parties I begin with s 191. Here it is clear from the side-note or heading that the purpose of the section to grant relief from Inheritance Tax where there is a fall in the value of land after death. This is supported by the provision that the section only applies if a claim is made. The expectation is that if values increase after a death then no claim will be made as that would increase the amount of Inheritance Tax payable. The section does not state in terms that it cannot apply where values increase after a death but it does state that the claim must be made by ‘the appropriate person’.’

If the taxpayer or agent continues to insist that a higher sale value be substituted, you should first establish the potential impact on any liability to Capital Gains Tax based on a higher ascertained value (IHTM09241+) and then refer the claim to IHT Technical.

Sales in fourth year IHTA83/s197A(2)

Sales made in the fourth year for more than the date of death value are excluded (IHTM33074) from the relief.