An essential part of the work carried out by the actuarial profession is the valuation of reversionary interests or life interests for the purpose of calculating either estate duty or stamp duty. The number of actuaries who are engaged in this work regularly is very small, but most actuaries are probably asked to undertake such valuations at some time or other. The object of this paper is to discuss some of the principles upon which these valuations are based and to illustrate the application of these principles by means of examples drawn from the authors' own experiences.

Under the Finance Act 1894, Estate Duty is payable on the principal value of a property. This is defined in Section 7 (5) of the same Act as follows:

‘The principal value of any property shall be estimated to be the price which, in the opinion of the Commissioners, such property would fetch if sold in the open market at the time of the death of the deceased.’