Inheritance Tax Act 1984 section 136

Transactions of close companies

Section 136 adjusts the relief available under section 131 where shares in a close company have been affected by certain transactions carried out by the company between the date of the original chargeable transfer and the date of death or sale.

• Where shares in a close company are the transferred property, any transfer of value by the company or alteration to its unquoted share or loan capital occurring between the chargeable transfer and the relevant date is a "relevant transaction" if it does not already trigger an adjustment under earlier sections of the chapter
• The market value of the shares on the relevant date is increased by the amount by which the relevant transaction reduced the value of the shares at the time of the original chargeable transfer — calculated as the difference between the actual value at transfer and what the value would have been had the transaction already taken place
• If the relevant transaction was a transfer of value by the company that increased the estate of the original transferor or, where applicable, their spouse or civil partner who is a long-term UK resident, the uplift is reduced by that amount
• If the relevant transaction would actually have increased the value of the shares at the time of the original transfer, the market value on the relevant date is instead reduced to what it would have been had the transaction never occurred