Skip to content

ACCA Strategic Professional · Advanced Taxation (UK) · Inheritance tax: the scope of inheritance tax

Which of the following is correct on the valuation of property for inheritance tax on a transfer of value?

Inheritance tax values property at the price it might reasonably be expected to fetch on the open market at the time of the transfer. Original cost and the later sale price are irrelevant, and the transferor's loss of estate value is the measure of the transfer.

  1. AProperty is valued at the price it might reasonably be expected to fetch on the open market at the time of transferCorrect
  2. BProperty is valued at the price paid by the transferor when it was acquired
  3. CProperty is valued at the transferee's cost on later sale
  4. DProperty is valued at the lower of cost and market value at the date of transfer

Explanation

For IHT, value is the open market value at the date of transfer, determined by what the property might reasonably be expected to fetch. Cost is irrelevant. The lower of cost and market value is a different, incorrect basis.

Did you get it right without looking?

One question tells you little. A timed set on Inheritance tax: the scope of inheritance tax shows your real accuracy, how long you take and where you lose marks.

Practise Inheritance tax: the scope of inheritance taxFree diagnostic mock

More Inheritance tax: the scope of inheritance tax questions