Inheritance tax reliefs are available to executors when they sell certain assets at a loss within particular timescales. However, with COVID-19 slowing down the administration of estates, there is a risk that these reliefs will be lost.

Due to the timescales involved, it is important that executors engage with their lawyers and continue to progress estate administration during this difficult time.

Loss on sale relief

Inheritance tax is paid on the value of the deceased's estate at the date of death. The loss on sale reliefs recognise that the value of certain assets can fall after death. On that basis, if an executor sells certain types of shares or land at a loss after the death, the executor, with the assistance of their solicitor, can reclaim some of the inheritance tax that was paid.


COVID-19 is continuing to have an impact on the stock markets. Therefore, it is conceivable that the value of shares owned by a deceased person may drop in value.

For example, a deceased person holds 100 shares in Company A which are valued at £100 per share at the date of death. As such, the date of death value of the shares is £10,000. Due to the overall value of the estate, inheritance tax of £4,000 is paid on the shares at the rate of 40%.

When it later comes to selling the shares, due to a fall in the market, the shares are now only worth £5,000. Essentially, inheritance tax of £4,000 was paid on an asset that is now worth only £5,000. The loss on sale relief rules allow for executors to apply to HMRC to substitute the date of death value for the lower sale price and, therefore, reclaim some of the paid inheritance tax.

The relief is available subject to certain conditions:-

  • The relief can only be claimed when the person selling the shares is the person responsible for paying the inheritance tax – this will usually be the executor.
  • The relief is restricted to certain types of shares – for example, it cannot be claimed on unlisted shares or shares traded on the Alternative Investment Market.
  • In determining whether there is a loss, all qualifying shares must be considered.
  • The shares must be sold within 12 months of the death.

The 12-month timescale may make claiming this relief particularly difficult due to the current circumstances.


Similarly, it is possible to make a claim to substitute the date of death value for the sale price of an interest in land.

This relief cannot be claimed where the difference between the date of death value and the sale price is less than the lower of 5% of the date of death value or £1,000. Additionally, the land must be sold within 4 years of the death.

Key Message

COVID-19 is having a logistical impact on almost all aspects of our lives.

Currently, most courts in Scotland are not dealing with deceased estates due to the ongoing restrictions. Despite these difficulties, there has been no suggestion that the above timescales for claiming these reliefs will be relaxed.

However, executors should continue to instruct their lawyers to progress matters as far as possible at the current time. This would involve contacting asset holders to obtain date of death values and preparing inheritance tax and confirmation forms.

Once restrictions are lifted, progress can then be made as quickly as possible. Executors will then be well placed to timeously reclaim the inheritance tax with the assistance of their solicitor.

For more information, please do not hesitate to contact any of the members of our Personal team.


Fraser Mackay