Reclaiming overpaid Inheritance Tax - what you need to know

Posted on 9th July 2020 by Streets


Image to represent Reclaiming overpaid Inheritance Tax - what you need to know

The Coronavirus pandemic has significantly impacted the economy; the uncertainty of what is to come has meant the stock markets have been hit and the housing market has been on hold, with many reporting property prices falling.


Those administering the estates of individuals who passed away before the Coronavirus pandemic may now find themselves in the difficult situation of selling shares or property at lower values than originally planned.

If Inheritance Tax (IHT) has already been calculated and paid based on higher values, there may be an option to reclaim the tax paid on the lost value of these assets.

In broad terms, IHT is generally applied to estates valued over the nil-rate band which is £325,000 for an individual and so tax may be payable on estates which exceed this value at a rate of 40%.

Tax is calculated on the value of assets at the date of death which may have been considerably higher than the actual value achieved on the sale of shares or property, following the impact of the Coronavirus pandemic.

IHT Loss Relief enables appropriate persons, usually the personal representatives, to apply for a refund of the overpaid tax if property or shares are sold at a lower value; a loss.

A claim for IHT Loss Relief can be made for the sale of listed shares and securities and unit trusts, for those sales that take place within 12 months of death, and for land and property for those sales that take place within 4 years of the date of death. The time limits for making these claims are 5 and 7 years respectively.

There are some specific rules to consider and once a claim is made it cannot be withdrawn. It is therefore important to seek advice to fully understand the position, process and ultimately the tax refund that could be due.

In light of the uncertain times we face, the ability to reclaim IHT may be more important than ever.

If you would like to understand whether you can make an IHT reclaim and for further details on the rules, please get in touch.


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The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.

Information

The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.


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