How to value unlisted shares in estate

2LeftFeet

Hi all

IHT400 completed and submitted for my late parent’s estate (sent forms early August, waiting to hear back from HMRC), fingers crossed for no sticky bits. Hoping they will allow grant on credit.

I check my late parent’s Email once a week and this week there was a notification on payment of a small (<£20) dividend from an unlisted company in which they held shares. An email to the company confirms they are unlisted, the holding is 125 shares and the holding is not “substantial” or “controlling”.

My request that they share the valuation of the share holding at the date of death, and at yesterday’s close was met with the response “we cannot comment on valuation”. Great.

So, I will need to complete IHT412 and to do so, will need to fathom what these untraded shares are worth. A quick dig in Companies House tells me there are >2M shares issued, and they are non-redeemable. There are accounts for the year ending March 2025 showing “Shareholder funds” of ~£650k. Am I correct that this represents the book value of the company, so then can I reasonably do a calculation of (N shares held / total N shares) * book value giving the “value” of the shareholding? Or is it more complicated than that??

Thanks to anyone who can shed some light on what I do about these shares which I believe hold little value but now create an extra admin task!

2LeftFeet.

Dead_keen

For a quick and easy valuation, multiply the dividend received by 10. If they have been held for more than two years then the chances are that business property relief may be available. With your notes to the valuation, say the name of the company, it's number, what it does and state the other facts you have mentioned and say that you have based the value on a 10% dividend yield.

For a professional valuation, you are looking at a good few thousand pounds.

2LeftFeet

Thanks Dead_Keen

Shares have been held since 2013. A quick read of the HMRC IHT manual suggests business property relief looks like it might apply but I am now confused as to whether I should complete IHT412 or IHT413? The company in which the shares are owned is Clear Books, which raised money through crowdfunding in 2013.

Sounds like a professional valuation is best avoided if 10x dividend approach can be applied!

Dead_keen

I looked at the accounts and it looks like business relief will be available. The accounts are as you described, but they are also have a qualified audit reporting saying reserves would be £121k lower if the company had complied with normal accounting. So a 10% dividend yield (my x10) is as good a way as any of doing a valuation for a very small minority. Mention the book value per share per accounts and then again after adjusting for the auditors adjustment in the notes. Those numbers all give roughly the same amount, and business relief means it is a non-point as far as whatever IHT you have to pay will be. I don't like book value per share as, if you are a tiny minority, you have no chance of getting it and if you do it properly you have to mark-to-market assets, which you can't do. If you go for business relief use IHT413.

poseidon1

It will be IHT 413 since I believe IHT 412 is relevant to AIM shares ( tradeable unlisted shares).

Bear in mind your valuation will not likely be formally agreed with HMRC ( because 100% BPR renders that unnecessary ), so you may have to revisit your valuation for CGT purposes if you ever get an opportunity to sell the shares privately, or the company is taken over by a competitor.

2LeftFeet

@Dead_keen and @poseidon1 - thank you so much for this very useful info. Virtual beers in appreciation…