What Happens to Shares and Investment Portfolios After Death?

Shares and investment portfolios are among the more complex assets to administer after a death, requiring specific valuation methods, notifications to multiple organisations, and careful decisions about whether to sell or transfer. The good news is that the Capital Gains Tax uplift at death removes the CGT liability on all gains made during the deceased's lifetime — potentially saving significant tax compared with selling the same investments during their lifetime.

Valuing shares for probate: the quarter-up method

For listed shares (those traded on a recognised stock exchange), HMRC requires a specific valuation method known as the "quarter-up" rule. This is used in the Inheritance Tax return (form IHT400 or IHT205) to value the shares at the date of death.

The quarter-up method works as follows:

• Find the lowest selling price (the lower of the two prices quoted in the stock exchange daily official list) on the date of death
• Find the highest buying price (the higher of the two prices) on the same date
• Calculate the quarter-up value: lowest selling price + ¼ of (highest buying price − lowest selling price)
• Also calculate the mid-price: (lowest selling price + highest buying price) ÷ 2
• Use whichever of the quarter-up value or the mid-price is the lower figure

Historical share prices for listed UK companies can be found on the London Stock Exchange website, Yahoo Finance, or through a stockbroker. Many investment platforms provide a probate valuation service for a fee (typically £50 to £150 per portfolio), which applies the correct method and provides the values in a format suitable for the probate application.

Shares held through a broker versus paper share certificates

Most modern share holdings are held electronically through a stockbroker or investment platform, in what is called a "nominee" account. In this arrangement, the broker holds the shares on behalf of the investor — the investor's name does not appear on the company's share register; instead the broker's nominee company appears. This makes the administration process relatively straightforward:

• Notify the broker's bereavement team with the death certificate and proof of your authority
• The broker freezes the account and provides a valuation at the date of death
• Once probate is granted, the broker can sell the investments or transfer them to a beneficiary's account

Paper share certificates present a more complex picture. If the deceased held shares in old, paper certificate form, they are registered directly with the company's share registrar. You need to identify each company, locate its share registrar, and notify them of the death. Major UK share registrars include:

• Computershare: Registrar for many FTSE companies; contact via computershare.com/uk
• Equiniti: Registrar for many large UK companies including Lloyds, BT, and Vodafone
• Link Group: Registrar for numerous UK listed companies

Send each registrar a certified copy of the death certificate and notify them that the registered holder has died. They will advise you on the transfer or sale process and the documents required. You do not typically need to surrender paper certificates immediately — the registrar will advise when and how these should be returned.

How to transfer shares to a beneficiary

Once probate has been granted, shares can be transferred directly to a beneficiary rather than being sold first. This is called a transfer in-specie (or re-registration). The process varies by broker and registrar but generally involves:

• The beneficiary opening an investment account with the same or a different broker (if held in a nominee account)
• Completing a stock transfer form (available from the registrar or broker), which sets out the number of shares being transferred and the details of the new holder
• Providing the original grant of probate and the death certificate
• Paying any applicable transfer fees (typically £10 to £50 per holding, though some brokers waive fees on death)

The beneficiary inherits the shares at their date-of-death value as their base cost for future CGT purposes. They should retain documentation showing this value.

Tax implications: the CGT uplift at death

The Capital Gains Tax treatment of shares on death is one of the most generous provisions in UK tax law. On death, all of the deceased's chargeable assets — including shares — are treated as if they were sold and immediately reacquired at their market value. This "deemed disposal" does not trigger a CGT charge: instead, it "wipes the slate clean" on any gains accumulated during the deceased's lifetime.

This means:

• If the deceased bought shares for £5,000 and they were worth £50,000 at death, the entire £45,000 gain is free from CGT
• The beneficiary inherits the shares with a base cost of £50,000 (the date-of-death value)
• If the beneficiary later sells the shares for £55,000, only the £5,000 gain made after the date of death is potentially taxable

Executors who sell investments before distributing cash to beneficiaries should be aware that CGT may apply to gains made between the date of death and the date of sale. The estate has a CGT annual exempt amount of £3,000 (from April 2024) available for each of the tax year of death and the following two tax years. Above this, gains are taxed at 18% (basic rate) or 24% (higher/additional rate) for residential property, and 10% or 20% for other assets.

Notifying the share registrar: what happens with paper certificates

For paper share certificates, the full process with the share registrar typically works as follows:

• Notification: Write to the registrar enclosing the original death certificate or a certified copy, along with a covering letter identifying the deceased shareholder by full name and address as shown on the certificate
• Registrar response: The registrar will send a bereavement claim form, which sets out the documents required to transfer or sell the shares
• Documentation required: Typically the original or certified grant of probate, the completed stock transfer form or sale instruction, and the original share certificates (which are cancelled and replaced)
• Processing time: Can take four to eight weeks depending on the registrar and the complexity of the holding

If the deceased held shares in many different companies (perhaps through a share save scheme or as a long-term private investor), you may need to deal with several registrars simultaneously. Keep a log of each company, its registrar, and the status of each claim.