Inheritance Tax Act 1984 section 192

Effect of purchases

Section 192 deals with the adjustment required to sale prices used in a land sale relief claim where the claimant also purchases interests in land during the relevant period, acting in the same capacity.

• If the claimant purchases any interests in land (in the same capacity) between the date of death and four months after the last qualifying sale, the purchase prices must be compared with the aggregate adjusted sale prices of all interests included in the claim.
• If total purchase prices equal or exceed total adjusted sale prices, no land sale relief is available at all; otherwise, an adjustment is made to each sale price using a formula based on the ratio of purchases to sales.
• The adjustment formula is (A × (D − S)) ÷ B, where A is the aggregate of all purchase prices, B is the aggregate of all adjusted sale prices, D is the death value of the interest, and S is the adjusted sale price of that interest.
• Where the death value exceeds the adjusted sale price the result is an addition to the sale price; where the death value is less than the adjusted sale price the result is a reduction — and the purchase price used in the formula does not include expenses.