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HMRC internal manual

Inheritance Tax Manual

Restrictions on relief for purchases: the restriction

The restriction is based on the ratio of the cost of the purchases of ‘qualifyinginvestments’ (IHTM34131) to the aggregate sale value,IHTA84/S180 (1). The formula used to calculate the restriction is

Aggregate value of relevant purchases     X     loss

Aggregate value of sales

The restriction is deducted from the loss that would otherwise be due.


The estate includes shares that have a date of death value of £12,000. The executorsells them within twelve months for £9,000. Under normal circumstances the loss would be£3,000. But within two months of the last sale the executor purchases other qualifyingshares for £5,000. The loss relief is reduced by

    £5,000    X    £3,000    =   £1,677


The net loss is now £3,000 - £1,677 = £1,333

If the aggregate value of the purchases equals or exceeds the aggregate values of thesales, no relief will be available.