There are special rules that apply when the ‘appropriate person’ ( IHTM34161)
In these circumstances the sold shares are apportioned between
those held at the time of death and those that are subsequently
acquired, IHTA84/S185.
Example
A trust fund has 15,000 ICI ordinary shares at the
deceased’s death. After the death a further 10,000 of these
shares are given to the trustees to hold on the trusts of the
settlement. The total trust holding is now 25,000 ICI ordinary
shares. The trustees subsequently sell 5,000 of the shares within a
year of the death.
Under IHTA84/S185 (1) the trustees are treated as selling
3,000 of the shares held at death and 2,000 of those that were
subsequently placed on trust.
The calculation used in this case to establish how many of
the sold shares were held at death is
| 15,000 | X | 5,000 | = | 3,000 | |
| 25,000 |
In considering whether two investments are of the same
description you should see IHTA84/S180 (3). But broadly speaking
two investments are not the same if they are separately quoted on a
stock exchange.
Only shares that a person acquires in the capacity of
personal representative or trustee are affected by this provision.
Any shares acquired in a personal or other capacity are not taken
into account.
If the additional shares are purchased, you will also need
to consider the impact of the restriction on relief for purchased
shares in IHTA84/S180. You can find more information about how S180
restricts the allowable loss at (
IHTM34211). There is an example that
shows what happens when both S180 and IHTA84/S185 apply at (
IHTM34215).
