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HMRC internal manual

Inheritance Tax Manual

Changes in shareholdings: rights sold

If the ‘appropriate person’ (IHTM34161) sell therights, the sale proceeds are added to the gross proceeds of sale of the original holdingto see if relief is due, IHTA84/S181.


The deceased has 1,000 BP shares valued at 540p per share. There is a rights issue of 1share for every 5 at 440p per share. The executors sell the rights for £180. They thensell the 1,000 shares for 490p per share within 12 months of death.

The date of death value has to be compared with the sale proceeds of both the rights andthe shares themselves. £5,400 is compared with £4,900 + £180 (£5,080). The loss onthis particular item is £320.

If only half the holding has been sold, IHTA84/S181 would only require that proportion ofthe capital receipt to be brought into account. The loss would be £2,700 – (£2,450+ £90) = £160.