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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Changes in shareholdings: changes in the capitalisation of a company

Special rules apply when there is a change to the shareholdings that are being dealt with by the ‘appropriate person’ (IHTM34161) as a result of changes in the capitalisation of a company.

IHTA84/S183 applies when

  • within a year of death
  • in relation to any of the ‘qualifying investments’ (IHTM34131)
  • there is a transaction to which TCGA92/S127applies.Broadly speaking this means a transaction involving a

  • a reorganisation of capital
  • a conversion of securities
  • an issue of shares or debentures (in certain circumstances)
  • changes to a unit trust scheme that corresponds to any of the above transactions.A transaction within IHTA84/S183 is not treated as a sale. For the purposes of the relief the new holding which results from the transaction is treated as being the same as the original holding.

You can find instructions on how to value the new holding on pages (IHTM34182) to (IHTM34184).