Inheritance Tax Act 1984 section 195

Valuation by reference to other interests

Section 195 deals with adjustments to the sale price of an interest in land where, at the date of death, that interest was valued together with other interests in land, resulting in a higher value than it would have had if valued on its own.

• Where an interest in land was valued at death together with other interests (whether in the same or other land), the sale price must be adjusted upwards.
• The adjustment equals the difference between the value on death (taking other interests into account) and the value on death if valued in isolation.
• This ensures the comparison between the death value and the sale price is made on a like-for-like basis.
• Without this adjustment, the sale price of a standalone interest could appear artificially low compared to an enhanced death value, potentially giving an unwarranted tax relief.

---