IHT relief when selling shares for less than IHT value

Q. I am executor of an estate which contains a number of shareholdings in quoted companies most of which are worth less than the values at the date of death, included in the IHT account. There seems no doubt that if the shares were sold now, there would be a claim for relief under Chapter III of Part VI IHT Act 1984 and a significant amount of IHT would be saved by substituting the sale proceeds for the IHT account values of the shares disposed of. However, the beneficiaries consider that the companies are good quality companies and would prefer to remain invested instead of selling. We are all considering the possible adverse effects of s180 IHT Act 1984 when reinvesting within two months of the last loss-making sale, but are anxious not to remain out of a market which is prone to make dramatic moves, both up and down.

A. Chapter III of Part VI IHT Act 1984 enables the sale proceeds, of ‘qualifying investments’ to be substituted for the value immediately before death, for the purposes of calculating IHT. This can of course reduce the IHT liability when markets have fallen. It is, however, essential that the investments be sold. It is not possible to retain them and claim relief simply because the value has fallen without selling the investments.