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HMRC internal manual

Inheritance Tax Manual

Changes in shareholdings: renounced bonus issue

The ‘appropriate person’ (IHTM34161) may choose to renounce 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 the deceased 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 a child. 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 calculation is

Adjusted date of death value Vs (H - S) = 800 (3,000 - Nil) = £1,000
  (Vs + Vr) 800 + 1,600  
Less gross proceeds     £800
Loss     £200