Inheritance Tax Act 1984 section 166

Creditors' rights

Section 166 deals with how the value of a creditor's right to receive a sum owed under an obligation is determined for inheritance tax purposes.

• When valuing a right to receive money owed, you must assume the debt will be paid in full.
• The value may be reduced only if recovering the sum is impossible or not reasonably practicable.
• No reduction is allowed if the difficulty in recovery was caused by the creditor's own act or omission.
• The underlying principle is that a debt is valued at its face amount unless genuine circumstances beyond the creditor's control prevent recovery.