The method of valuation of shares, securities and strips for capital gains tax, corporation tax and income tax purposes has been changed by Statutory Instrument 2015/616 with effect from 6 April 2015. The statutory instrument does not apply to inheritance tax.
The value now used for most capital gains tax purposes is the figure one-half of the way up from the lowest to the highest closing prices of the day.
As things stand, the value for inheritance tax purposes is still the ‘quarter up’ price at the date of the chargeable event. There is no valuation method specified in Inheritance Tax Act 1984, s160 so the ‘quarter-up’ approach remains an acceptable basis for valuing listed shares and securities for inheritance tax purposes. For an estate on death Taxation of Chargeable Gains Act 1992, s274 determines that where a value has been ascertained for inheritance tax purposes that value is to be used as the acquisition cost for capital gains tax so on death the valuations remain aligned.
It is understood that HM Revenue & Customs has said it will clarify the position by amending the guidance at IHTM18093 in due course.
HM Revenue & Customs is aware of the discrepancy in valuation methods for capital gains tax and inheritance tax purposes and is assessing the impact of the change before considering any amendments to align the two valuation methods.
The Statutory Instrument may be found at https://goo.gl/ZrBWz3
