Claiming back ‘death tax’ money fits bill for families
PAYING a big inheritance bill is painful enough, but it is even worse if you end up paying more than you owe.
Around 32,000 families have overpaid IHT in the last six years, new figures from financial advisers NFU Mutual show, but the good news is that they can claim this money back.
Inheritance tax is based on the value of an estate on the date of death, and must normally be paid within six months.
If the value of assets such as property or shares have fallen by the time executors sell them, families can reclaim any overpaid tax from HMRC.
This tax refund is not automatic and has to be actively reclaimed, said Sean McCann, chartered financial planner at NFU Mutual.
Tens of thousands of families have been reclaiming IHT overpayments during a period when property and shares have mostly been rising in value. The number of reclaims could increase if asset prices start falling instead, as interest rates rise and recession fears grow.
McCann said: “It’s important families check whether they have overpaid inheritance tax. In some circumstances reclaims can amount to thousands of pounds.”
IHT is a growing threat, with HM Revenue & Customs expected to raise £37billion from the hated “death tax” over the next five years, an increase of £10bn on the previous five years.
Chancellor Rishi Sunak has frozen the IHT threshold at £325,000 until at least 2026, with the nil-rate main residence band for family homes frozen at £175,000.
This will steadily drag more families into the net, as house prices and stock markets rise, so don’t pay more than you need to.