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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Calculating the loss: capital payments

Capital payments are included in the sale price if

  • at any time after the death, the ‘appropriate person’ (IHTM34161) receive any capital payments attributable to ‘qualifying investments’ (IHTM34131) comprised in the death estate


  • sells the investments within 12 months, IHTA84/S181.The term capital payment includes any money, or money’s worth that does not constitute income for income tax purposes. But it does not include the sale price of the qualifying investments.

Sums received from the disposal of rights to a provisional allotment of shares or debentures are treated as a capital payment, IHTA84/S181 (2).

Common situations where capital payments are received include where the company makes a capital distribution or there is a bonus (IHTM34185) or rights (IHTM34187) issue.