Inheritance tax warning: Thousands recover overpaid IHT as on their estates | Personal finance | Finance

Tens of thousands of people have been able to claim a cash refund for overpaid tax, according to research by financial advisers NFU Mutual. Inheritance tax is levied on the value of a person’s estate at the date of death, which generally includes property, money and possessions. Under HM Revenue and Customs (HMRC) rules, the IHT must normally be paid within six months.

On the occasion an executor happens to sell property or shares, and the price has fallen, it is possible to reclaim the overpaid tax from HMRC.

However, this particular inheritance tax refund is not automatic and must be proactively reclaimed by the claimant.

This is only available if executors sell assets within four years of death, or if they sell stocks or other qualifying investments within 12 months of death.

Overall, the UK public have made over 22,000 inheritance tax claims for property and just under 10,000 claims for shares and investments.

READ MORE: 88-year-old in tears after losing £36,000 in savings – after ‘licking’ for 50 years

Sean McCann, Certified Financial Planner at NFU Mutual, explained what these numbers mean when it comes to the public’s relationship to inheritance tax.

On how people can recover money in the IHT, Mr McCann explained: ‘A large inheritance tax bill can be an unpleasant shock to grieving families.

“These figures show that more and more people are becoming aware of the possibility of recovering overpaid inheritance tax.

“Given the dynamism of the housing market, it is surprising to see more than 22,000 claims have been made on the sale of a property or land.


“In some cases, this will have resulted from an overvaluation of the property in the inheritance tax declaration or from deterioration of the property between the death and the subsequent sale.

“There have also been nearly 10,000 claims made following a fall in stocks or investment values.

‘During periods of market volatility his significant families check whether they have overpaid inheritance tax, in certain circumstances claims can amount to thousands of pounds.’

In addition to this, NFU Mutual has shared how people can maximize the amount they can claim in IHT.

Over the next five years, inheritance tax is expected to raise a further £37bn, which is an increase of £10bn from the £27bn accumulated over the past five years.

Families can maximize the amount of inheritance tax they recoup during periods of market volatility, according to McCann.

He added: “As more and more families are drawn into the net of inheritance tax, it is important that they realize that they can reclaim overpaid inheritance tax.

“If you recover the overpaid IHT as a result of a decline in stocks or investments, all eligible investments sold by the executor within 12 months of death must be included in the claim, not just those that lost value.

“If some have appreciated in value, this will reduce the amount of recoverable inheritance tax.

“In these circumstances, it may be more advantageous for the executors to pass on the shares or investments that have increased in value directly to the beneficiaries rather than selling them.

“This means you only claim stocks that have fallen in value, allowing you to maximize the benefits.”

Comments are closed.