188体育

The legislation does not clearly indicate what figure to take for the unadjusted value in respect of investments forming part of a new holding resulting from a transaction under IHTA84/S183.聽 You should take

• a proportion of the unadjusted value of the new holding (which is the same as the unadjusted value of the original holding)
• based on the respective values on death of the investments sold or exchanged and of the new holding.

Example

The Abacus trust fund includes 1,000 Armitage Ltd shares valued immediately before death at 拢1,000.聽 Two months after the death the trustees take up a 1 for 2 rights issue at 拢1 per share (paying 拢500).聽 There is now a new holding of 1,500 shares and the date of death value of 拢1,500.聽 Six months later they sell half the holding for 拢200.

Applying the formula in IHTA84/S183 (5), the value on death of the investments sold is

拢200 脳 (拢1,500 - 拢0) 梅 (拢200 + 拢200) = 拢750

Without the provisions in IHTA84/S188, the loss of sale would be;

拢750 - 拢200 = 拢550.

But this exceeds the unadjusted value which is

拢750 梅 拢1,500 脳 拢1,000 = 拢500

The relief is restricted (IHTM34230) under IHTA84/S188 and the sale value is treated as:

拢750 - 拢500 = 拢250, making a loss of 拢500.

You should refer any case where this approach is resisted to Technical (IHTM01081).