Inheritance Tax Act 1984 section 162

Liabilities

Section 162 sets out the rules for how liabilities (debts and obligations) are taken into account when valuing a transferor's estate for inheritance tax purposes, including restrictions where reimbursement rights exist and special rules for foreign liabilities and incumbrances on property.

• A liability backed by a right to reimbursement is only deductible to the extent that reimbursement cannot reasonably be expected to be obtained.
• A liability payable at a future date must be discounted to its present value at the relevant valuation date, except that the transferor's own inheritance tax liability is always taken at full face value with no discount for deferred payment.
• A liability secured on a specific property (an incumbrance) must, so far as possible, be set against and reduce the value of that particular property.
• A liability owed to a non-UK resident that is neither payable in the UK nor secured on UK property must, so far as possible, be set against and reduce the value of the transferor's overseas property rather than UK property.