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HMRC internal manual

Inheritance Tax Manual

Pre-owned assets: election into Inheritance Tax: land & chattels - chargeable portion

The chargeable portion in relation to the property concerned means DV ÷ V where DV & V are the values used at IHTM44010. However, in arriving at the value for DV, the transactions taken into account include those after the time when the election takes effect as well as before that time. The valuation dates to be used in these circumstances are:

  • where the Inheritance Tax charge arises under FA86/S102(3); the date of death and
  • where the charge arises under FA86/S102(4); the date on which the property ceases to be subject to a reservation.

It is necessary to use the chargeable portion test to reflect the fact that part of the value of the property may already be included in the person’s estate. This would be case where the individual had executed an Ingram scheme and the value of the lease has always been part of their estate. The chargeable portion of the property would in effect be the value of the property subject to the lease.