Thousands owed inheritance tax rebate
Are you one of the thousands who have overpaid inheritance tax in the last four years?
Thousands of people in Britain could be owed an inheritance tax rebate according to figures released by NFU Mutual.
Inheritance tax, paid based on the value of a property at the time of death, could be reclaimed if the property sells for less within four years.
Given that house prices have fallen by around 11% over the last four years according to Land Registry figures, it is likely that thousands of properties could have sold for less than their value at the time of probate or when the inheritance tax was settled on an estate.
NFU Mutual reckons there is potentially £90 million worth of tax waiting to be claimed back, equating to a rebate of about £4,260 across 21,000 estates of residential properties that were settled in the last four years.
Current inheritance tax rules
Inheritance tax is duty paid on your estate once you die. Known by some as the 'death tax', it's payable at a rate of 40% on anything above the threshold currently £325,000.
Most of the time the executor of the will or trustee must pay inheritance tax within six months of when the deceased died.
This duty has to be paid before any outstanding debts are paid off and any money or belongings can be distributed to people in the will.
There are plenty of ways to reduce the amount of inheritance tax your estate faces, from writing your life insurance policy in trust to making use of your annual gift allowances. For a rull run down, check out How to cut your inheritance tax bill.
How to claim your rebate
Those who inherited in the periods June 2008 to February 2009 and June 2010 to August 2011 are the most likely to be eligible for money back. That's because, according to Land Registry figures, these two periods had the greatest fall in house prices.
If you think you are owed a rebate, the advice from NFU Mutual is to contact HMRC straight away.
There are forms for overpaid inheritance tax that are available on the HMRC website called the IHT38- Claim for relief - loss on sales of land which could get your claim going.
Bear in mind that these rebates don’t just apply to residential property, but also to investments like shares and unit trusts sold at a lower value within 12 months of death. You could start a claim for overpaid IHT on shares and trusts using the IHT35 - Claim for relief - loss on sales of shares form.
More on tax:
How to cut your inheritance tax bill
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