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What is inheritance tax share loss relief?




By Peter Baxter, Chartered Wealth Manager at BRI Wealth Management

Where the present value may be lower than the probate value, it may be appropriate for executors and beneficiaries to consider the sale of the deceased’s investment portfolio rather than transferring assets. IHT share loss relief is a way of recalculating an estate’s Inheritance Tax bill in situations where the executors sell shares or investments at a loss within 12 months of the date of death.

The relief applies to all ‘qualifying’ investments. These are generally shares or securities listed on a recognised stock exchange and/or holdings in authorised unit trusts or their open-ended equivalent. To allow them to sell the investments, executors usually need to obtain a grant of probate which they can do once they have paid the initial Inheritance Tax bill.

Using form IHT35, executors/beneficiaries can then claim share loss relief by choosing to replace the value of the shares/investments at the date of death in the Inheritance Tax return with their actual value when sold. The executors or beneficiaries need to include all qualifying investments they have sold, not just the ones they sold at a loss. HMRC will then recalculate the IHT figure to reflect the new estate value and then repay the beneficiaries the excess tax amount.

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