As the name suggests, this relief concerns instances where assets are sold for a lower amount than their market value at the date of death (used for probate purposes). Where available, this relief will result in a refund of IHT. This relief can be claimed when:
1. Quoted shares/securities are sold by the executors within 12 months of death.
All sales of quoted shares in the period must be accounted for, and relief can only be claimed if there was an aggregated loss. As an executor, you must be careful if you wish to buy back the shares you have sold at a loss, as this would lead to a restriction in the relief that may be claimed.
2. Land/buildings are sold by the executors within three years of death.
All sales are taken into account and relief can be claimed for any aggregated losses within a three year period following death. Further losses made in a fourth year are also eligible for relief, but any profit within this fourth year can be ignored. Again, there are certain conditions on the purchase of land/buildings that could lead to a loss restriction.
3. Assets that have been valued in conjunction with other assets are sold within three years of death.
As part of a group of assets, some assets may be sold at a lower value than the original amount liable to tax. In this case, the ‘stand-alone’ value of the asset (the value of this single asset at the date of death), replaces the original value in the tax computation.