How to fill in form IHT35 — claiming loss relief on shares sold after death
Form IHT35 lets the executors or administrators who paid Inheritance Tax on the deceased's listed shares claim a refund when those shares are sold at a loss within twelve months of death — the claim itself must reach HMRC within four years of that window closing.
The relief works on the whole basket of sales together, not share by share, and a repurchase too soon after selling restricts what can be claimed.
This walkthrough covers what counts as a qualifying investment, the net-loss schedule, the repurchase trap and its restriction formula, and the follow-up questions HMRC asks about exchanges, options and holding changes.
United Kingdom·Informational, not legal or financial advice·Verified against GOV.UK, 2026
This walkthrough takes the IHT35 form field by field, in plain English. Most of it is administrative — the difficulty is knowing which boxes actually matter, and the one most families get wrong.
The thing most people get wrong
The relief is worked out on the WHOLE basket of qualifying sales made in the 12 months after death — every sale, gains and losses netted together — not on the individual shares that happened to lose money.
List every sale, not just the ones sold at a loss; the form is explicit about this. Leaving out the gains overstates the loss — and misstates the claim.
The form, in summary
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IHT35·4 pages·26 fields guided
With Valoren35 minutes
Without Valoren2–3 hours
pulling every qualifying sale from broker/platform statements and running the aggregation
IHT35 is the claim mechanism for loss relief on 'qualifying investments' under sections 178–180 of the Inheritance Tax Act 1984: shares and securities listed on a recognised stock exchange at the date of death, UK Government stock, and unit trust holdings.
The relief substitutes the sale price for the date-of-death value when qualifying investments are sold, in aggregate, at a net loss within 12 months of death (s.179(1)); the claim itself must then be made within 4 years of the end of that 12-month period (s.179(2A)).
The relief applies to the whole basket of qualifying sales together — gains and losses in the same 12-month window are netted off, so an executor cannot select only the losing holdings.
A repurchase of qualifying investments, in the same capacity, between the date of death and 2 months after the last sale restricts the relief under section 180.
·Who Files — The 'appropriate persons' — those who paid the Inheritance Tax on the shares, usually the executors or administrators — signing personally; HMRC will not accept a claim signed by an agent
·4 pages · 26 fields guided
·Draws from your Estate File — Financial Accounts, Legal Instruments
Section01
§11
Section 1
Before you claim — eligibility, deadlines, and who signs
IHT35 has a narrow purpose and a strict signing rule. Confirm the claim actually qualifies before working through the schedule.
01
Who is an 'appropriate person'
Only the people liable for the Inheritance Tax on the shares can claim — typically the executors, administrators, trustees or donees who are paying that tax.
If more than one group could be liable, the appropriate persons are whichever group is actually paying it.
State the capacity you're signing in (executor, transferee, trustee) — the form asks for this next to each signature.
02
No tax paid, no claim
You cannot claim relief if no Inheritance Tax was due on the delivery of the IHT account.
If no tax has been paid, there is no 'appropriate person' in the first place — there's nothing for the relief to reduce.
03
The two deadlines
To qualify, the sale must happen within 12 months of the date of death.
The claim itself — the form, not the sale — must then reach HMRC within 4 years from the end of that 12-month period.
You can claim provisional relief within the 12 months if not every sale has happened yet; HMRC may review the provisional figure later.
04
No agents
HMRC will not accept IHT35 if it's signed by an agent — a solicitor or accountant signing on the executors' behalf.
Every appropriate person making the claim signs personally, in their own capacity.
IHT35 has a narrow purpose and a strict signing rule. Confirm the claim actually qualifies before working through the schedule.
HM Revenue & Customs (HMRC) · IHT35❦
Section02
§22
Section 2
What counts as a 'qualifying investment'
The relief only applies to a specific category of holding. Getting this wrong at the start means reworking the whole schedule.
01
What qualifies
Shares and securities listed on a recognised stock exchange at the date of death; UK Government stock (gilts); and holdings in unit trusts.
02
What doesn't qualify
Holdings in unlisted companies, and holdings quoted only on a market that doesn't meet HMRC's definition of 'listed' — AIM is the common trap, because AIM doesn't count as a recognised exchange for this purpose. Check gov.uk's list of recognised stock exchanges if you're unsure.
Loan notes don't qualify either. None of these belong on IHT35, whatever loss they made.
03
When a transfer to a beneficiary counts as a 'sale'
If shares were given to a beneficiary to satisfy a pecuniary legacy, with that beneficiary's consent, HMRC treats it as a sale for this relief — but only if the personal representatives didn't already have the power to make that transfer without needing consent.
This is a genuinely easy detail to miss, since no money changes hands.
The relief only applies to a specific category of holding. Getting this wrong at the start means reworking the whole schedule.
HM Revenue & Customs (HMRC) · IHT35❦
Section03
§33
Section 3
The schedule — every sale, and the net loss calculation
This is the core table: every qualifying investment sold in the 12 months after death, whether it made a loss or not.
01
List every sale — not just the losers
Enter every sale of a qualifying investment made in the 12 months after death, whatever the outcome — the form is explicit that this means all sales, not only the ones sold at a loss.
Column A is the value at the date of death; column B is the gross sale proceeds.
02
The date that matters is the contract date
Use the date contracts were exchanged, not the settlement date — unless the sale resulted from an option, in which case use the date the option was granted.
03
Gross proceeds — don't deduct costs
The relief is based on the gross sale price, restricted only by the net cost of any purchases (see Section 4).
Don't deduct commission, broker fees, or other selling costs from the sale figure.
04
What the death-date value can and can't include
The value at date of death may include any interest that had accrued but wasn't yet paid on gilts, loan stock or debenture stock — but it must NOT include any dividend that was due but unpaid at that date.
05
The result: column C
Total column A, total column B, and subtract: A minus B equals C, the net loss.
If the total proceeds exceed the total death-date value — a net gain across the portfolio — there's nothing to claim, and no additional tax is due on the gain either.
This is the core table: every qualifying investment sold in the 12 months after death, whether it made a loss or not.
HM Revenue & Customs (HMRC) · IHT35❦
Section04
§44
Section 4
The repurchase trap — box 2 and the aggregation rule
This is where a claim gets restricted without the executor realising why. Two things: you can't cherry-pick which shares to claim for, and buying back into the market too soon after selling reduces what you can claim.
01
You cannot cherry-pick the losers
The relief works on the whole basket of qualifying sales in the 12-month window, not asset by asset.
If some holdings fell and others rose, the rises and falls are netted off together — you can't claim relief only on the shares that lost money while quietly keeping the ones that gained.
Selling the winners after the claim window has closed is a legitimate way to sequence disposals, but everything sold WITHIN the 12 months goes into one basket.
02
The repurchase restriction
If you buy any qualifying investments — in the same capacity as the claim — between the date of death and 2 months after the date of the last sale in the claim, the relief is restricted.
List the purchases: description, purchase price, and sum paid (excluding expenses) in column D.
03
How the restriction is calculated
The formula on the form itself: (D ÷ B) × C = E, where D is total purchases, B is total sale proceeds, and C is the net loss.
E is the restriction; the allowable loss (F) is C minus E.
In plain terms: the more you buy back relative to what you sold, the less of the loss you're allowed to claim.
04
Why this rule exists
It stops an executor selling shares to crystallise a loss for tax purposes and then immediately buying the same (or similar) shares back — the Inheritance Tax equivalent of the 'bed and breakfasting' rules found elsewhere in tax law.
If you're planning to reinvest the estate's portfolio, timing matters: wait until 2 months after your last claimed sale, or accept the restriction.
This is where a claim gets restricted without the executor realising why. Two things: you can't cherry-pick which shares to claim for, and buying back into the market too soon after selling reduces what you can claim.
HM Revenue & Customs (HMRC) · IHT35❦
Section05
§55
Section 5
The follow-up questions — boxes 3 to 8
Five yes/no questions cover situations that can also restrict the relief, beyond a straightforward repurchase. Answer honestly — a 'yes' doesn't rule the claim out on its own, but it does need explaining at box 8.
01
Exchanges (box 3)
Were any qualifying investments exchanged, with or without payment, in the 12 months after death — for example, as part of a company takeover or share-for-share exchange?
02
Capital payments (box 4)
Did any of the sold investments generate a capital payment — money or money's worth that isn't income for Income Tax purposes, or the proceeds of selling 'rights' (not the sale proceeds of the investment itself)?
03
Calls (box 5)
Were any 'calls' paid on the sold investments — a call being a payment a shareholder is asked to make to a company they hold shares in?
04
Changes in the holding (box 6)
Did the holding change during the 12 months — for example, through a bonus issue or rights issue?
A changed holding counts as a NEW holding under section 216 of the Taxation of Chargeable Gains Act 1992, which affects how the sale is treated.
05
Options (box 7)
Was any option to buy or sell qualifying investments acquired or exercised — whenever the option itself was originally acquired?
06
Details (box 8)
Any 'yes' answer to boxes 3–7 needs an explanation here.
HMRC uses these details to check whether the relief still applies in full, or needs restricting — it doesn't automatically disqualify the claim.
Five yes/no questions cover situations that can also restrict the relief, beyond a straightforward repurchase. Answer honestly — a 'yes' doesn't rule the claim out on its own, but it does need explaining at box 8.
HM Revenue & Customs (HMRC) · IHT35❦
Section06
§66
Section 6
Repayment authority and the declaration
The last page asks where any refund should go, and requires you to tick one of two boxes about your future intentions — this determines whether the relief granted is final or provisional.
01
Repayment authority
As with C4, any refund is paid by Faster Payments directly to a bank account, identified by the Inheritance Tax reference number on the statement.
Give the account name, sort code and account number.
02
Tick box 1 if the claim is final
Tick this box if you will not sell or exchange further qualifying investments in the 12 months after death, and/or will not purchase any qualifying investments in the 2 months after the date of your last sale — in other words, the figures on this form are the whole picture.
03
Tick box 2 if more sales or purchases are still to come
If further sales, exchanges or purchases are intended, tick box 2 instead.
The relief HMRC grants will be provisional, and you must tell them about any further sales, exchanges or purchases as they happen.
HMRC won't issue final clearance until the position is settled.
04
Every appropriate person signs, with their capacity
Name, capacity (executor, transferee, trustee), signature and date — for each of up to four signatories.
The form repeats the note from page 1: this cannot be accepted if signed by an agent.
The last page asks where any refund should go, and requires you to tick one of two boxes about your future intentions — this determines whether the relief granted is final or provisional.
HM Revenue & Customs (HMRC) · IHT35❦
Section07
§77
Section 7
After you claim
What the relief actually does to the estate's figures, and two timing traps worth knowing before you claim.
01
How the relief lands
The allowable loss substitutes the sale price for the date-of-death value used in the IHT400/IHT411 calculation — it isn't a separate cash rebate calculated as a flat percentage.
The reduction in tax follows from the lower revised estate value, at whatever rate applies to that part of the estate.
02
The capital gains tax knock-on
The market value of any investment for capital gains purposes becomes the value at date of death AFTER this relief is applied — so a successful IHT35 claim also resets the CGT base cost that future disposals are measured against.
03
Claim before you distribute
If a claim is made after the qualifying investments have already been distributed out of the estate to beneficiaries, relief may not be available.
Don't let a slow distribution timetable close this option — file IHT35 for a completed round of sales before assets move on to beneficiaries where practical.
What the relief actually does to the estate's figures, and two timing traps worth knowing before you claim.
HM Revenue & Customs (HMRC) · IHT35❦
Many people file IHT35 themselves — that is what this walkthrough is for. If the estate behind it has stopped being simple — inheritance tax to pay, a trust, foreign assets, a dispute — Signum, Valoren’s own specialist desk, can take it on, and we say so plainly: it starts with a free intake, and if you do not need us, we will tell you. Prefer an independent adviser? STEP and the Chartered Institute of Taxation both keep public member directories, and neither pays Valoren a referral fee.
FAQ
IHT35 questions, answered.
01What is form IHT35 for?›
IHT35 lets the executors or administrators who paid Inheritance Tax on the deceased's listed shares claim relief when those shares are later sold at a loss.
The sale price replaces the date-of-death value used in the estate's tax calculation.
02Which shares qualify for the relief?›
Shares and securities listed on a recognised stock exchange at the date of death, UK Government stock (gilts), and holdings in unit trusts.
Unlisted companies, AIM shares — AIM doesn't count as a recognised stock exchange for this relief — and loan notes do not qualify.
03What's the deadline?›
The sale must happen within 12 months of the date of death.
The claim itself must then reach HMRC within 4 years of the end of that 12-month period.
04Can I only claim for the shares that lost money?›
No. The relief applies to the whole basket of qualifying sales made in the 12 months after death — gains and losses are netted off together.
You cannot cherry-pick individual losing holdings while keeping the ones that gained.
05What if I buy more shares soon after selling?›
Buying qualifying investments, in the same capacity as the claim, between the date of death and 2 months after your last sale restricts the relief.
The restriction is calculated using a formula on the form itself — the more you buy back relative to what you sold, the smaller the allowable loss.
06Can my solicitor sign IHT35 for me?›
No. HMRC will not accept a claim signed by an agent.
Every appropriate person — the executor, administrator, trustee or transferee actually liable for the tax — must sign personally.
07What if the shares have already gone to the beneficiaries?›
If a claim is made after the qualifying investments have been distributed from the estate, relief may not be available.
Claim before distributing, where the timetable allows it.
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Where this fits
IHT35 is one form. The file behind it is the rest.
A share-loss claim depends on knowing exactly what IHT411 declared at the date of death, and matching every sale against it.
The Financial Accounts record holds the investment and platform detail; Legal Instruments holds the original IHT400/IHT411 figures the claim measures against.
When you're ready — not before — our £179 Executor's First Hour walks you through registering the death, notifying banks and pensions, and getting probate started, in the right order. The free checklist above covers the essentials; this is for when you'd rather have a hand to hold. Executor's First Hour — £179 →
HM Revenue & Customs (HMRC)·26 fields·Free to file·35 minutes with Valoren
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