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HMRC internal manual

Inheritance Tax Manual

Loss on sale of land: purchases: formula used for adjusting the sale price

The adjustment to the sale price (IHTM33072) is calculated by using the formula:

A × (D-S) ÷ B


  • A is the aggregate purchase price of all interests purchased
  • B is the aggregate sale price (after any adjustments for changes in the interest or underlying land (IHTM33121), statutory compensation received (IHTM33130), leases (IHTM33131) and valuations with reference to other interests in land (IHTM33132) have been made, IHTA84/SS193 -195) of all of the interests sold.
  • D is the value on death (IHTM33100) of the interest sold.
  • S is the sale price of the interest sold (after any of the adjustments referred to at B above have been made under IHTA84/Ss193 -196)..

Where (D - S) is a positive figure (as in the case of Blackacre in the example at (IHTM33163), the adjustment takes the form of an addition to the sale price.

Where (D - S) is a negative figure (as in the case of Whiteacre in the example at (IHTM33163), the adjustment takes the form of a deduction from the sale price.