Under IHTA84/S196 the sale price ( IHTM33072) is adjusted where
If the claim relates to one qualifying sale only, that
qualifying sale price is increased by the amount of the excess of
the sale price of the non-qualifying interest over its value on
death.
If there is more than one qualifying sale, the excess must be
appointed between the qualifying sales according to their
respective losses (or gains) on sale using the ‘appropriate
fraction’
The appropriate fraction should be calculated as follows
Example
Properties X and Y were sold by qualifying sales, but Z was sold by a non-qualifying sale.
The values and prices were as follows
| Property | Value on death (a) | Sale price (b) | Difference | Apportioned gain of property Z (c) | Adjusted sale price (b+c) |
| X | 90,000 | 95,000 | 5,000 | 1,000 | 96,000 |
| Y | 80,000 | 60,000 | 20,000 | 4,000 | 64,000 |
| Z | 50,000 | 55,000 | 5,000 |
The gain on the non-qualifying sale is £5,000. The denominator is £25,000, the total differences of the qualifying sales, whether the differences are gains or losses. The denominator is not the same as the net loss on the qualifying sales (£15,000), it does not include the £5,000 difference in the value of Z because Z is not n interest to which the claim relates. So the apportioned gains for properties X and Y, shown as (c) above, are
|
X | £5,000 | x | 5,000 | ||||
| 25,000 | |||||||
|
Y | £5,000 | x | 20,000 | ||||
| 25,000 |
In the above example the sale price (b) of those properties which qualify (but not those which do not) is arrived at after making any adjustments for changes in the interest or underlying land (IHTM33120), compensation received ( IHTM33130), leases ( IHTM33131) or valuation with, and sales without other land ( IHTM33132).
