Loss on sale of shares: background
Loss on sale of shares relief was introduced in the 1973 Finance Act. The legislation is now found in IHTA84/S178 – 189.
What the relief does
When someone dies any stocks and shares in the estate are valued for Inheritance Tax (IHT) purposes at their date of death value (IHTM09703). But the price of shares can vary dramatically and, if shares are sold in the year following the death at an overall loss, relief may be available. In simple terms, the relief allows for the sale price of the sold shares to be substituted for their date of death values.
The basic conditions (IHTM34011) for claiming the relief are set out on the next page.
This relief does not apply to shares that are transferred in the deceased’s lifetime. There are separate rules (IHTM14621) for claiming relief when the value of these shares fall.