IHTM14664 - Interests in land: compensation

If the transferee receives any compensation you may need to make an adjustment within the provisions of IHTA84/S137 (1).

These provisions do not apply if, between the date of transfer and the date of death or sale, compensation becomes payable to the transferee (or their spouse or civil partner ( IHTM11032)) under any enactment because

• a restriction is imposed on the use or development of the land

or

• the value of the interest is reduced for any other reason.

In this event, add the amount of the compensation to the value of the property at the date of death or sale and otherwise ignore the change for the purpose of the relief.

Example

After the transfer of land worth £10,000 a restriction on development is imposed and £3,000 compensation paid to the transferee. At the date of death the market value is £6,000, which has to be increased by £3,000 to £9,000 for relief purposes.