Inheritance Tax: How can families claim ‘thousands’ from HMRC when property prices fall?
Following a drop in UK house values in recent months, families may be able to reclaim IHT from HM Revenue and Customs, potentially saving thousands of pounds.
Housing prices in the United Kingdom have declined in recent months: between June and July 2021, house prices in the United Kingdom fell 3.7 percent, while in England they fell 4.5 percent. Families will be entitled to reclaim Inheritance Tax if the value of their house declines between the date of death and the date of sale, which could have a significant influence on estate planning.
According to NFU Mutual, the tax is calculated based on the value of the property at the time of death, and overpayment IHT can be reclaimed from the government if the property is sold by the executors within four years after death for a lower price.
According to new FOI numbers, 3,630 families regained IHT this way in 2020/21, potentially affecting thousands.
As property values “slump,” additional reclaims may be forthcoming, and the same criteria may be applied to losses on stock sales.
The tax is levied on estates having a total value of more than £325,000, with a 40% tax rate applied to the portions of the estate worth more than that.
While IHT was intended to affect primarily the wealthiest families, growing home prices have put more people into its reach.
While many families will be grateful for the IHT tax rebate, it should be noted that it is not given out automatically. Families will have to go out of their way to “proactively” reclaim what they are entitled.
“With house values continuing to fall, it’s crucial families are aware of this opportunity to recover Inheritance Tax, which could save them thousands of pounds,” said Sean McCann, a Chartered Financial Planner at NFU Mutual.
“Inheritance Tax is calculated based on the value of a person’s estate on the date of death, and it is usually due within six months.” However, if the property is sold for a lower price within four years of death, the unpaid Inheritance Tax can be refunded.
“The number of these reclaims decreased last year as a result of the strong housing market, but they are expected to rise if house prices continue to plummet.” With the Inheritance Tax limits set to remain fixed for the next five years, an increasing number of families are finding themselves caught in the net. It’s critical to seek counsel in order to assure. “Brinkwire Summary News.”