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HMRC internal manual

Savings and Investment Manual

Deeply discounted securities: taxation: death

Death of holder

On the death of the holder of a deeply discounted security, there is a deemed disposal at market value to the personal representative immediately prior to death. The personal representative of the deceased is also deemed to acquire the bond at that market value. (ITTOIA05/S440 (2)(d)).

Transfer by personal representative

Where a personal representative transfers a deeply discounted security to a legatee, the transferor is treated as receiving the market value of the security at the time of the transfer. The deemed market value proceeds are used for the purpose of calculating the profit or loss made by the personal representative. The market value is also treated as the cost of the security for the legatee. (ITTOIA05/S440 (2)(e)).