ihta84/s174.- Income tax and unpaid [inheritance tax

[1975 Sch.10 para.9(1)(e)(f); 1984 s.96(8), Sch.9 para.14.]

174. - (1) In determining the value of a person's estate immediately before his death, allowance shall be made for -

(a) any liability for income tax in respect of an offshore income gain, within the meaning of Chapter [V of Part VII of the Taxes Act 1988 ¹ ], arising on a disposal which is deemed to occur on the death by virtue of section [757(3) ² ] of that Act; and

(b) any liability to income tax arising under [Schedule 13 to the Finance Act 1996 (discounted securities) on a transfer which is treated as taking place by virtue of paragraph 4(2) of that Schedule. ³ ]

[1975 s.51(1), sch.10 para.9(2A); 1976 s.100(1).]

(2) Where in determining the value of a person's estate immediately before his death a liability for [inheritance tax ⁴ ] is taken into account, then, if that tax or any part of it is not in the event paid out of the estate, the value of the estate immediately before his death shall be treated as increased by an amount equal to that tax or so much of it as is not so paid.

1 1988(T), Sch.29, para.32. Originally "VII of Part II of the Finance Act 1984". The insertion should read "V of Part XVII"; the Part is incorrectly shown as VII in 1988(T).

2 1988(T), Sch.29, para.32. Originally "92(3)".

3 Substituted by 1996 Sch.14, para.2 in relation to deaths on or after 6 April 1996. Originally "paragraph 1 of Schedule 9 to the Finance Act 1984 (deep discount securities) on a disposal which is deemed to occur by virtue of paragraph 2(2) of that Schedule". 1984 Sch.9 "1 of Schedule 9 to the Finance Act 1984" and "2(2)" amended by 1988(T) to "4 of Schedule 4 of that Act" and "7(2)" respectively.

4 See 1986 s.100(1) and (2) - for any liability to tax arising on and after 25 July 1986 any reference in the legislation to capital transfer tax has effect as a reference to inheritance tax.