Over 5,000 families reclaimed overpaid Inheritance Tax (IHT) in the 2022/23 tax year, according to a freedom of information1 (FOI) request.
The number of families – 5,160 to be precise – who have reclaimed overpaid IHT is 22% higher than the previous year. Furthermore, in the 2023/24 tax year, over 1,000 families have already reclaimed.
If an asset – such as property or investments – is valued higher upon the owner’s death than the eventual sale price, then too much Inheritance Tax may have been charged. It all depends on how long after death the asset is sold. Inheritance Tax can be reclaimed if a property is sold for less than anticipated within four years of the previous owner’s death; investment losses will also be eligible for a refund if they occur within a year of death.
Why more people have been reclaiming overpaid IHT
Following several years of significant house price growth during the pandemic, property prices are now falling. This means that properties that were valued for IHT at the height of the pandemic are now likely to fetch a lower sale price. Stock market volatility due to recent political and economic uncertainty has also led to investment losses for many.
How to reclaim
The executor of the estate (or the administrator if the owner died intestate) must actively reclaim any IHT they believe has been overpaid.
It is important to understand that a claim, once made, cannot be withdrawn.
More information on Inheritance Tax can be found on the Government website.
Taking sensible tax steps
It’s important to ensure you are in the best place possible when it comes to tax planning and your finances. Sensible tax planning can help to reduce the amount of tax you pay and safeguard your wealth for the future. We can help – please get in touch.
Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. The Financial Conduct Authority does not regulate tax planning.
1 NFU Mutual