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HMRC internal manual

Inheritance Tax Manual

Changes in shareholdings: renounced bonus issue

The appropriate person (IHTM34161) may choose to renounce (or give up) the bonus issue for either

  • consideration, or
  • gratuitously.

Renounced for consideration

You should refer any claim where the shares allotted under a bonus issue are renounced for consideration to Technical (IHTM01081).

Renounced gratuitously


At the date of death Graham owned 1,000 qualifying shares, valued at £3,000.  Shortly after death there was a 1 for 2 bonus issue that was renounced gratuitously in favour of Amy.  Subsequently half of the original holding, 500 shares was sold within 12 months for £800.

In this case you should use the formula (IHTM34183) in IHTA84/S183 (5) to calculate the date of death value of the shares sold.  The loss is the difference between that value and the gross proceeds.


The adjusted date of death value is:

Vs(H – S) ÷ (Vs + Vr) 

800 (3,000 – Nil) ÷ (800 + 1,600) = £1,000)

Deduct the sale proceeds of £800 from the adjusted date of death value of £1,000 to give a loss on sale of £200.