# What is inheritance tax share loss relief? Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-12-09 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: Unlocking IHT Share Loss Relief: How Executors Can Save on Meta Description: Explore how executors and beneficiaries can claim IHT share loss relief, recalculate Inheritance Tax, and potentially reduce Capital Gains Tax, with guidance URL: https://financedigest.com/what-is-inheritance-tax-share-loss-reliefhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1344217729-1736814742446-compressed.jpg) ![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/peter-baxter-1736814742436-compressed.jpg) _By_ **_Peter Baxter,_** Chartered Wealth [Manager at BRI Wealth Management](https://www.financedigest.com/wealth-management-consultant.html "Wealth management consultant") Where the present value may be lower than the probate value, it may be appropriate for executors and beneficiaries to consider the sale of the deceased’s [investment portfolio](https://www.financedigest.com/heineken-to-invest-300-million-in-brazil-to-expand-premium-beer-portfolio.html "Heineken to invest 0 million in Brazil to expand premium beer portfolio") rather than transferring assets. IHT share loss relief is a way of recalculating an estate’s Inheritance Tax bill in situations where the executors sell [shares or investments at a loss within 12 months](https://www.financedigest.com/european-shares-hit-nine-month-high-dollar-wobbles-after-powell-remarks.html "European shares hit nine month high, dollar wobbles after Powell remarks") of the date of death. The relief applies to all ‘qualifying’ investments. These are generally [shares or securities listed on a recognised stock](https://www.financedigest.com/oil-stocks-thrust-london-shares-to-positive-2023-start.html "Oil stocks thrust London shares to positive 2023 start") exchange and/or holdings in authorised unit trusts or their open-ended equivalent. To allow them to sell the investments, executors usually need to obtain a grant of probate which they can do once they have [paid the initial Inheritance Tax](https://www.financedigest.com/walmart-paid-most-of-1-billion-tax-for-phonepe-shifting-base-to-india.html "Walmart paid most of billion tax for PhonePe shifting base to India") bill. Using form IHT35, executors/beneficiaries can then claim share loss relief by choosing to replace the value of the shares/investments at the date of death in the Inheritance [Tax](https://www.financedigest.com/how-much-council-tax-train-tickets-and-rent-voted-worst-value-for-money-things-in-the-uk.html "How much!? Council tax, train tickets and rent voted worst value for money things in the UK") return with their actual value when sold. The executors or beneficiaries [need to include all qualifying investments](https://www.financedigest.com/the-six-things-you-need-to-consider-before-starting-or-investing-in-an-ico.html "The six things you need to consider before starting or investing in an ICO") they have sold, not just the ones they sold at a loss. HMRC will then recalculate the IHT figure to reflect the new [estate value and then repay the beneficiaries the excess tax](https://www.financedigest.com/buy-to-let-tax-changes-pushing-landlords-to-alternative-real-estate-investments.html "Buy-to-let tax changes pushing landlords to alternative real estate investments ") amount. Points to note: - **Anti-avoidance rule**: There is a rule in place which forbids [selling and repurchasing the shares](https://www.financedigest.com/kuehne-raises-lufthansa-stake-to-17-5-as-germany-sells-remaining-shares.html "Kuehne raises Lufthansa stake to 17.5% as Germany sells remaining shares") within a two-month window. This is intended to stop people from selling the shares simply to create a loss, claiming the [tax relief and then buying the same or different shares back](https://www.financedigest.com/3-options-to-consider-when-you-owe-the-irs-back-taxes.html "3 Options to Consider When You Owe The IRS Back Taxes") again. - **Relief applies to net** loss: The relief applies to the net [loss on the sale of all investments within the twelve months since](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down") death. This means that if some [investments were sold at a profit](https://www.financedigest.com/uks-dominos-expects-tech-investments-to-hit-2023-profit.html "UK’s Domino’s expects tech investments to hit 2023 profit") this will reduce the loss figure on which you can reclaim the IHT. - **Implications for [Capital Gains Tax](https://www.financedigest.com/investors-often-ignore-capital-gains-tax-but-should-consider-selling-now-to-avoid-a-higher-future-tax.html "Investors often ignore capital gains tax, but should consider selling now to avoid a higher future tax") (CGT)**: If IHT is paid on an asset on death, usually there isn’t a Capital Gains Tax charge at the same time. However, when an IHT claim is made for a loss on the [sale of the shares](https://www.financedigest.com/monte-dei-paschi-to-have-underwriting-consortium-for-share-sale-by-tuesday-source.html "Monte dei Paschi to have underwriting consortium for share sale by Tuesday – source"), the base cost for CGT will also be substituted for the market value of the shares when they were sold. This means that executors will not benefit from the loss twice. - **Effect on the Residence Nil Rate Band (RNRB)**: An IHT share loss relief claim will also reduce the [value of the estate when calculating](https://www.financedigest.com/accountants-can-add-even-value-offering-clients-new-breakeven-cis-calculators-downloadable-app.html "Accountants Can Add Even More Value by Offering Clients New Breakeven and CIS Calculators from Their Own Downloadable App") the available Residence Nil Rate Band (RNRB). The new, substituted [value will be used to determine](https://www.financedigest.com/events-will-determine-currency-values-over-2018.html "Events will determine currency values over 2018") whether the threshold has been passed. This delivers a further potential tax benefit if some or all of the RNRB is reinstated. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---