Loss on sale of shares: basic conditions
The claim for relief must be made within 4 years of the end of the 12 month period during which qualifying sales can be made, IHTA84/S179 (2A). Four basic conditions must be met before the relief may be claimed. These conditions are set out below
The shares sold must be ‘qualifying investments’
The following are qualifying investments for the purposes of this relief:
- listed shares and securities (including those that are listed on a recognised foreign stock exchange (IHTM34140))
- unit trusts
- for deaths on or after 10 March 1992 shares listed on NASDAQ (National Association of Securities Dealers Automated Quotations)
The following are not qualifying investments
- unlisted shares
- shares traded on the Alternative Investment Market (AIM)
You can find out more about qualifying investments at (IHTM34131).
The sales must be within 12 months of death
The relief only applies to qualifying investments that are sold in the 12 months immediately following the date of death.
Special rules apply to investments that cannot be sold. You can find out more about this condition and what is or is not treated as a sale for the purposes of this relief at (IHTM34155)
The shares must be sold by the appropriate person
To qualify for relief the shares must be sold by the appropriate person. The appropriate person is the person who is liable for the tax. This will usually be the
- legal personal representatives (for investments in the free estate), or
- trustees (for investments in a settlement).
The appropriate person (or persons if there is more than one) must make the claim for the relief.
There must be an overall loss on the sales of the qualifying investments
Relief is only available if the gross sale proceeds of all shares sold by the appropriate person within 12 months of death is less than the date of death value for those shares. In other words there must be an overall loss on all sales. All sales of qualifying investments have to be included in the claim - not just those that have fallen in value.
Special rules apply if there are changes in shareholdings (IHTM34181) between the date of death and the date of sale. There are also restrictions (IHTM34213) on the relief if the appropriate person purchases shares.
You can find detailed instructions on how the loss is calculated at IHTM34171.