IHT400 Notes : Guide to completing your Inheritance Tax account

IHT400 Notes
The other joint owner is
a spouse or civil partner
Guide to completing your Inheritance Tax account
However, in the case of a house or land, the open market value of a share is
likely to be less than a share calculated in this way, as a discount may be
appropriate. The amount of the discount will vary depending on the
circumstances of each property and whether English or Scottish law applies.
English law – To give us a starting point, you may reduce the arithmetical
share of the value of the whole of the property by 10%. This will give us an
indication of the value of the share of the property. This figure of 10% is
only to give us a starting point. The amount of the discount, as well as the
value estimated for the whole of the property, may need to be changed
after the grant has been issued.
Example
The deceased owned a house worth £120,000 jointly with one other
person. The arithmetical value of the deceased's share is £60,000 and this
may be reduced by 10% (or £6,000). The value to include is £54,000.
Scottish law – Under Scottish law a joint owner has a right to raise an
action for division and sale. A discount for joint ownership will reflect the
cost and possible delay of raising such an action. The cost is not related to
the value of the property, so cannot be calculated in percentage terms.
As a starting point you may deduct £4,000 from the value of the whole
property before calculating the arithmetical value of the deceased's share
as the value to be included in the account. This is only a starting point.
The value estimated may need to be changed after you get confirmation.
Whether English or Scottish law applies you must not apply any discount if
the other joint owner is the deceased's spouse or civil partner. Special rules
prevent this discount from applying, so you should include the deceased's
arithmetical share of the whole value of the house or land.
We will usually ask the Valuation Office Agency to give us their opinion of
the value of the deceased's property. They will take into account the
circumstances of any jointly owned property and amount of discount to be
allowed. If the Valuation Office Agency cannot accept the figures you have
used, they will try to agree a value with you. If the agreed value is more
than the figure that you have suggested, you may have to pay some more
tax (and interest).
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