Myth-busting – Electrical Safety installations Act 202011:19 AM, 3rd August 2020
About 5 days ago 64
Falling house prices has meant up to £90 million has been overpaid in inheritance tax by families and friends who have been left a home in a will.
Insurance firm NFU Mutual reckons the tax is reclaimable under a special rule called sale of land relief.
The relief lets someone who has inherited a home and then sold the property go back and renegotiate the amount of inheritance tax (IHT) due with HM Revenue & Customs.
To qualify, the claim has to show the property value fell 1% or £5,000, whichever is the lowest, within 48 months of the previous owner’s death.
The latest average house price figures from the Land Registry show prices in England and Wales have dropped 1% in the past 12 months and even more in the previous three years.
Under sale of land relief, IHT is recalculated by switching the current home value for the date of death value.
Assuming an estate worth more than £675,000 included a home sold in April 2008 for £350,000, now valued at around 12% less (£308,000), the estate can claim to recalculate the IHT paid on the current value.
This would save £16,800 IHT on the £42,000 price difference – plus interest on the overpaid sum.
A claim is valid for up to six years after the date of death.
Make the claim by completing and sending a Form IHT38 to the tax office that dealt with the IHT.
A free download is available from HMRC’s website.
NFU Mutual personal finance specialist Sean McCann said: “Many people don’t realise that they can claim back inheritance tax if the property they inherit sells for less than it was valued at during probate.
“With house prices generally falling across over the last four years, thousands of people could still be able to claim back any such overpayment.”
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