Inheritance Tax Act 1984 section 186A

Cancelled investments

Section 186A provides relief where qualifying investments in a deceased person's estate are cancelled without replacement within twelve months of death, by treating them as sold for a nominal sum of one pound.

• If qualifying investments held at the date of death are cancelled (without being replaced by other shares or securities) within twelve months of the death, and the appropriate person still holds them immediately before cancellation, they are treated as sold for £1.
• This deemed sale for £1 allows the investments to be brought into the loss relief calculation under the shares and securities relief provisions in Chapter 3 of Part 6 of the Act.
• When cancelled investments are included in the overall loss calculation under section 179(1), the normal deduction for incidental sale costs does not apply, since there is no actual sale and therefore no costs to deduct.
• This relief has applied to deaths occurring on or after 16 March 1992 and ensures that shareholders are not left without any relief simply because their shares ceased to exist rather than being sold at a loss.