The Coronavirus pandemic has caused the stock markets to plummet in value and the property market to be put on hold. For those who have died within 12 months and paid inheritance tax on qualifying shares, which have now been sold at a loss, it may be possible to claim for a refund, as inheritance tax is calculated by using the values of a person’s estate at the date of death. The same applies for land if the deceased person has died within 4 years.
If qualifying shares (securities on a recognised stock exchange, UK Government Stock/gilts and holdings in unit trusts) are sold within 12 months of death for less than the date of death value, a claim can be made to reduce the amount of inheritance tax. All sales must however be included in the claim, whether they have been sold at a loss or gain.
The sale of shares must have been made by the “appropriate person”, who is usually the personal representative or trustee so if the shares have already been transferred to a beneficiary who then sells them, the relief cannot be claimed.
There is also a time limit to claim the relief for sales made within the anniversary of the death for shares which is 5 years from the date of death.
Bear in mind however that it is not possible to bring a claim if the assets qualified for 100% Business Property Relief as there would have been no inheritance tax to pay in the first place.
Careful consideration must therefore be given when deciding to make the claim particularly as it may affect the capital gains position in the estate.