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If someone who owned stocks and shares has died, it's important to get an accurate value of them. The way to value them depends on whether they're 'listed' or 'unlisted' shares.
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Stocks and shares that are listed on the London Stock Exchange or on another recognised stock exchange are known as 'listed' stocks and shares.
You can find the value of listed stocks and shares by looking at the financial pages of a newspaper, or by looking on the newspaper's website or a commercial website. Use the closing price on the day the person died. You can usually find this in the following day's newspaper - main city libraries hold paper copies for three years and CD-ROM copies back to March 1982.
If the deceased person owned shares in a lot of companies you might find it easier to get a professional valuation from someone like a stockbroker. They'll give you an end of the day quotation for each of the shares. The price will appear as a range - for example 1091p to 1101p.
You'll normally have to pay for a professional valuation. You can find a stockbroker on the London Stock Exchange website - but not all stockbrokers are listed there.
To value the shareholding, multiply the number of shares by the price per share. For example, if the deceased person owned 100 shares and their value was 1091p, the value of the shareholding is £1,091.
If you're given a range of prices you should use the range of prices to calculate what's known as the 'quarter up' price and use this as your valuation.
If the range is given as 1091p to 1101p and you have 1,000 shares, you work out the 'quarter up' price as follows:
1. Find the difference between the higher price and the lower price:
1101p -1091p = 10p
2. Work out a quarter of the difference between the two prices: 10p × 0.25 = 2.5p
3. Add a quarter of the difference to the lower price: 1091p + 2.5p = 1093.5p
So the quarter up price is 1093.5p and the value of the 1,000 shares is £10,935 (1,000 × 1093.5p).
Stocks and shares usually pay a bonus or 'dividend' to their shareholders once or twice a year. Sometimes, as an alternative to a dividend payment, there is an increase in the value of the shares or the shareholder is entitled to more shares.
If a bonus was due when the person died, the shares will have a marking next to the quoted price like 'xd', 'xc', 'xr' or 'xe'. Next to the marking will be a price or percentage that you'll need to include in your valuation.
You work out the value of the bonus or dividend to include in the estate by multiplying the number of shares by the bonus figure per share.
If the figure is given as a percentage, you work out its value by taking a percentage of the 'nominal' value of the shares (sometimes called the face value).
A bonus of 3% on 400 shares with a nominal value of £1 would be £12
(£400 × 3% = £12).
You should use the price after Income Tax has been deducted - the 'net' price. Newspapers and websites give the net price for UK companies but the 'gross' price for overseas companies.
Some stocks and shares calculate interest on a daily basis but the payments are only made once or twice a year, these types of stocks and shares will show either a marking of 'im' or 'ik' on a daily basis. In these cases you'll need to work out their value from the date the last payment was made until the date of death.
If the payment date has been declared the markings change to 'im…x' or 'ik…x'. If the person died after the payment had been declared but before it was made you should deduct the net interest from the date the person died to the date of the payment.
Working out the value of these is complicated and it's a good idea to use a professional valuer to help you.
Newspapers don't show the value of dividends due on unit trusts so
you'll need to find out the value from the fund manager.
If two prices are given you should use the lower price as the value of a unit trust.
If the deceased person held UK Government stock and bonds such as Gilts or Treasury Bills you should contact Computershare at the UK Debt Management Office to ask them for a valuation. They will need to see a copy of the death certificate. Use the closing price on the day the person died. There's no charge for valuations.
If the deceased person had shares in an ISA (Individual Savings Account) you should ask the ISA fund manager for a valuation. You should be able to find contact details from paper work held by the deceased person. Use the closing price on the day the person died. If you can't obtain a valuation you should list the shares and value them in the same way as other shares. You can deduct any managers' fees from the valuation.
The same applies to PEPs (Personal Equity Plans) and TESSAs (Tax Exempt Special Savings Accounts).
If the person died on a day when the stock exchange was closed, you can use the closing price on either:
For example, if the person died on Sunday, and the closing price was lower on Monday than on the previous Friday, you can use Monday's price.
Unlisted shares are shares in a private company. They are not listed on a recognised stock exchange and they aren't offered to the general public. Many family businesses are private companies.
You can't use the nominal value of the shares for your valuation unless it accurately reflects the open market value. So if the nominal value of the ordinary shares in the company is £1, the nominal value of 1,000 ordinary shares is £1,000 - but this is unlikely to be the market value of the shares.
Because there's no active open market for most unlisted shares, you should look at information normally available to shareholders such as the company's accounts and performance status and consider the following factors to help you decide the value:
However you may also need to contact the company secretary or accountant to find out the market value of unlisted shares.
Sometimes it may become clear before you apply for probate (confirmation in Scotland) that you got your valuation wrong.
For example, you discover some more share certificates that you hadn't included in your original valuation.
In these situations you must contact the Probate and Inheritance Tax Helpline to tell them the new value.
If you sell shares within one year of the date of death for less than the value that you paid Inheritance Tax on, you may be able to claim relief for the loss. To make a claim use form IHT35 Claim for relief - loss on sales of shares.