Inheritance Tax Act 1984 section 176

Related property, etc. — sales

Section 176 provides relief where property that was valued using the related property rules (or valued together with other estate property passing under a different title) is sold within three years of death for less than its original inheritance tax value.

• Where property in the deceased's estate was valued under the related property rules or in conjunction with other estate property not vested in the vendors, and is sold within three years of death, a claim can be made to re-value it on a standalone basis at the date of death.
• The sale must be a genuine arm's length transaction at a freely negotiated price, with no connection between vendor and purchaser, and must not be made in conjunction with a sale of the related property with which it was originally valued.
• Relief only applies if the arm's length sale price (adjusted for any changes in circumstances between death and sale) is less than the original related property valuation used for inheritance tax.
• For shares or securities in a close company, relief is blocked if the value of those shares or securities was reduced by more than 5% between death and sale due to changes in the company's share or loan capital or the rights attaching to them.

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