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HMRC internal manual

Inheritance Tax Manual

Loss on sale of land: sales: sale price

‘Sale price’ is defined as:

  • the price for which the interest in land is sold, or
  • if greater, the best consideration that could have been obtained at the time of the sale.

No account is taken of incidental expenses such as stamp duty, legal fees or estate agents’ commission, IHTA84/S190 (4). So in a straightforward case the gross price realised is taken as the value for IHT purposes on the death.

If there is a change in the interest in land or in the underlying land between the date of death and the date of sale an adjustment to the sale price (IHTM33121) may be needed.

If the taxpayers answer ‘Yes’ to question 2 on page 3 of the form IHT38 you will need to send a form VO to the VOA (IHTM23000), asking what was the best price that could reasonably have been obtained at the date of sale. If the VOAs’ figure is different from the valuation put forward by the taxpayers you will have to ask the VOA to negotiate an agreed value. You should also consider asking the VOA for this information if you have reason to believe from the information supplied on the form IHT38 that the property was not sold at arms’ length. If there is any evidence that the sale

  • was to a beneficiary or a relative of the beneficiary, or
  • to the trustees of a settlement under which they could benefit or had a right to repurchase then the sale may not qualify for relief (IHTM33081).