IHT Share Loss Relief During Coronavirus Lockdown

Published / Last Updated on 21/05/2020

A person died before the coronavirus lockdown and the estate has already payed inheritance on higher share values or property values to secure probate (probate is not usually granted until the inheritance tax liability has been paid).

Coronavirus hits the globe, lock down starts and stock market collapse in February and March 2020.

Probate has been granted and now the executor or personal representatives can distribute the estate.

The estate is now lower than the value that the taxes were paid on. 

  • Shares are sold at a lower value to pay monies to beneficiaries or transferred to beneficiaries at a lower value.
  • Property is sold at a lower value to pay monies to beneficiaries.

As it now a lower value when sold/transferred what happens?

Property lower value:  The executor can contact HMRC, prove the property sold at a lower value than estimated (provided not sold to a friend or relative) and HMRC will adjust the inheritance tax bill and issue a refund of overpaid taxes to the estate.

Shares lower value:  This is a dilemma for the executors and beneficiaries. 

  • Executors can apply for Share Loss Relief and in the same way as property above, prove the shares were sold at a lower market value than estimated and HMRC will adjust the inheritance tax bill and issue a refund of overpaid taxes to the estate
  • Executors can transfer the shares to beneficiaries at the lower value.  The beneficiary will be deemed as having received the shares at the higher value and because they are lower value now, they have suffered a capital loss.  Capital losses can be carried forward to offset against future capital gains indefinitely.  Can sell the shares today, suffer the capital loss and offset against any other capital gains tax due this year.

We suspect in most cases, and probably what is most equitable, is to adjust the estate value and liability for inheritance tax and seek a refund of inheritance at 40% given that capital gains rates are only at 10% and 20% for shares and 18% and 28% for property


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