»Ê¹ÚÌåÓýapp

»Ê¹ÚÌåÓýapp deemed transfer of value (IHTM04042) under IHTA84/S4 (1) takes place immediately before the deceased’s death. However, the death itself often affects the value of a person’s property, for example, a life assurance policy maturing on the death will often pay out a greater sum than the open market value of policy immediately before the death. IHTA84/S171 recognises this by providing that certain changes in value, which occur by reason of the death, are to be taken into account in valuing the estate.

»Ê¹ÚÌåÓýapp changes to be taken into account are specified in IHTA84/S171 (2). Subject to the exception mentioned below, the changes are:

• an addition to the property in the estate
• an increase in the value of any property in the estate, and
• a decrease in the value of any property in the estate (unless the decrease results from an alteration in the capital or share rights of a close company (IHTM04069) under IHTA84/S98 (1)).

Examples

• Damages payable to the personal representatives under the Law Reform (Miscellaneous Provisions) Act 1934 are included in the death estate.
• A life assurance policy maturing on the death is valued as a sum immediately payable.
• Property that becomes vacant on the death is valued with vacant possession.
• If the deceased’s death causes a fall in the value of shares, this is taken into account.

IHTA84/S171 does not however apply to the termination of a qualifying interest in possession (IHTM16062) on death or to property which passes by survivorship to the remaining joint owner(s) by reason of the death (IHTM15081). IHTA84/S171(2) disapplies IHTA84/S171 in these circumstances and a charge is levied on the open market value of the assets concerned.