Q&As

A non-UK trust (A) holds shares in company B, which itself owns a UK residential property. A has also made a loan to B, which is still outstanding. For the purposes of Schedule A1 of the Inheritance Tax Act 1984 could the fact that A holds shares and debt in B result in a double charge to inheritance tax?

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Published on LexisPSL on 29/03/2018

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • A non-UK trust (A) holds shares in company B, which itself owns a UK residential property. A has also made a loan to B, which is still outstanding. For the purposes of Schedule A1 of the Inheritance Tax Act 1984 could the fact that A holds shares and debt in B result in a double charge to inheritance tax?
  • Valuation of A’s shareholding
  • Valuation of loan from A to B

In answering this Q&A we have assumed the following:

  1. that the trust and the company in question are both resident outside the UK for UK tax purposes

  2. that the trust’s shareholding in the company constitutes an interest in a close company within the meaning of paragraph 2(1) of Part 1 of Schedule A1 of the Inheritance Tax Act 1984 (IHTA 1984)

  3. that the residential property in question constitutes a UK residential property interest within the meaning of IHTA 1984, Sch A1, Pt 1, para 8

  4. that the trust has made a loan to the company, which is still outstanding

Valuation of A’s shareholding

IHTA 1984, Sch A1, Pt 1, para 2(5) states:

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