IHTM14664 - Lifetime transfers: specific lifetime reliefs: interests in land: compensation
If, between the date of transfer and the date of death or sale, compensation becomes payable to the transferee (or their spouse or civil partner) under any enactment because
- a restriction is imposed on the use or development of the land, or
- the value of the interest is reduced for any other reason
the instructions at IHTM14662 do not apply. Instead, you add the amount of the compensation received to the value of the property at the date of death or sale in accordance with IHTA/S137(3). You ignore the change to the interest in land for all other purposes of the relief.
Example
After the transfer of land worth £100,000 a restriction on development is imposed and £30,000 compensation is paid to the transferee. At the date of death the market value is £60,000. The compensation of £30,000 has to be added to the £60,000 under IHTA/S137(3) to give a value at the date of death of £90,000 for relief purposes.