Inheritance Tax Act 1984 section 183

Changes in holdings

Section 183 deals with what happens for inheritance tax purposes when qualifying investments in a deceased person's estate undergo a corporate reorganisation or similar share-for-share transaction within 12 months of the date of death.

• Where a share reorganisation, conversion of securities, share-for-share exchange, or equivalent unit trust transaction occurs within 12 months of death, the resulting new holding is treated as the same as the original holding for the purposes of the loss on sale relief.
• The value on death of the new holding is taken to be the value on death of the original holding, plus any consideration given for the new holding (excluding surrenders, cancellations or alterations of the original shares, and excluding capitalisation of company assets).
• If investments from the new holding are sold within the 12-month period, their value on death is calculated using the formula: Vs(H − S) ÷ (Vs + Vr), which apportions the value on death of the new holding between the investments sold and those retained.
• Market value for the purposes of this formula means the value the investments would have for inheritance tax purposes if they were comprised in the estate of a person who died at the time of the sale.

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