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HMRC internal manual

Inheritance Tax Manual

Loss on sale of land: changes in the interest or underlying land: leases

You must make an addition to the sale price (IHTM33072) where the interest is a leasehold with not more than fifty years to run at the date of death, IHTA84/S194 (1).

The amount of addition is the ‘appropriate fraction’ of the value on death (IHTM33100) of the interest in land. The appropriate fraction is:

(P1 - P2) ÷ P1

Where:

  • P1 is the percentage derived from the table (IHTM14670) in TCGA92/SCH8/para1 for the duration of the lease at the date of death, and
  • P2 is the corresponding percentage derived from the table in TCGA92/SCH8/para1 for the duration of the lease at the date of sale (IHTM33071).