IHTM18093 - Valuation: shares

Valuation method

Normally, if the price shown for a listed share does not fall within the price range for the date of death, PC&S calculate and show the ¼ up price as the appropriate value to be adopted.

• The 1/4 up figure is the figure 1/4 of the way up from the lowest to the highest closing prices of the day, as listed by the various market makers (IHTM25262).

Occasionally however the appropriate value will not be the ¼ up price. PC&S also check and calculate the mid-bargain price and show this as the appropriate value if it is lower than the ¼ up price. PC&S will make it clear whether their value is the ¼ up or the mid-bargain price so that you can provide the correct explanation of the revised value to be adopted.

• The mid-bargain price is halfway between the highest and lowest bargains for the particular share recorded for the relevant day, excluding bargains at special prices.
• “Bargains” are the prices at which shares actually changed hands in deals brokered by the market makers.

Authority for valuation methods

These valuation methods were traditionally used for Estate Duty. They are now prescribed in statutory form, latterly at TCGA92/S272 (3) for Capital Gains Tax (CGT) purposes. As the value ascertained for IHT is taken to be the market value for CGT (TCGA92/S272 (3)), We apply identical methods.

The methods do not however necessarily apply for large or control holdings (IHTM18111).

Example of 1/4 -up value

The deceased owned 1,250 10p ordinary shares in Abbey National Plc. He died on 25 January. The Financial Times for 26 January tells you that the end of day quotation for the date of death was “p1091 - 1101”.

To work out the value of the shares, multiply the number of shares by the “1/4-up” price. This is the lower price (1091) plus 1/4 of the difference between the two prices (1/4 of 10p = 2.5p). The “1/4-up price” is 1091 + 2.5 = 1093.5p per share. The total holding will be 1093.5 x 1,250 = £13,668.75.

Additional markings

Watch out for additional markings (IHTM18098), such as “XD” which are common and will affect the chargeable value.

UK listed foreign shares

Foreign shares listed on the London Stock Exchange may have their nominal value given in the currency of their country, for example $10. However, the price shown will be in sterling. You can value these shares as described above.