Losing a loved one is awful enough. Don’t let overpaying the ‘most hated tax’ make it even more painful.
As we are all aware, recent world events have impacted the economy and resulted in volatile markets, including property and stock markets. Although nobody would want the value of their investments to fall, it can result in being able to claim for an Inheritance Tax (IHT) refund.
When someone dies their assets will be valued and any IHT due must be paid before anything in the estate can be passed to their beneficiaries.
"If, when sold, certain assets are worth less than at the time of the person’s death some of the tax paid may be reclaimed."
Inherited property or shares may not then be sold by the executors for some time and could obviously change in value within that time.
The good news....
If, when sold, in certain assets are worth less than at the time of the person’s death some of the tax paid may be reclaimed.
"There is no automatic trigger for the refund...Claims must be actively made to HMRC by the executors."
….and the not so good news
However, all assets sold must be reported when submitting your claim, not just those sold at a loss. This means that if some investments have increased the amount of tax it’s possible to reclaim will be reduced.
Reclaims cannot be made for any investments or properties already transferred to beneficiaries who go on to sell them at a loss.
The time restrictions from the date of death for when assets must have been sold to potentially qualify for a reclaim are as follows:
- Stocks and shares - within 12 months
- Property – within 4 years
Being proactive pays
There is no automatic trigger for the refund – that would make life easy. Claims must be actively made to HMRC by the executors. It’s worth speaking to your lawyer if you think there’s a chance you may be due a refund
Clare McCarroll, Partner, Private Client Services
To return to the main contents of lindsays life issue 23, please click here.
