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HMRC internal manual

Inheritance Tax Manual

Calculating the loss: capital payments

Capital payments are included in the sale price if

  • at any time after the death, the appropriate person (IHTM34161) receives any capital payments attributable to the qualifying investments (IHTM34131) that were included in the death estate and
  • they then sell the investments within 12 months, IHTA84/S181.

The term capital payment does not include the sale price of the qualifying investments but does include any money, or money’s worth, that is not treated as income for income tax purposes. 

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 issue (IHTM34187).