Thousands of Britons may have paid more Inheritance Tax (IHT) on residential property than they needed to, according to new figures released on Monday.
With house prices falling by around eleven percent over the last four years, tax specialists at financial services provider NFU Mutual say that up to £90 million in tax could be reclaimable.
IHT – which is based on the value of the property at point of death – can be reclaimed if the property sells for less within four years. The study showed an estimated 21,000 estates could be due an average rebate of £4,260, as many people simply “don’t realise” what they may be owed. Those who inherited between June 2008 to Feb 2009 and June 2010 to August 2011 are the most likely to be eligible for money back.
Sean McCann, personal finance specialist at NFU Mutual, 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. And with house prices generally falling across over the last four years, thousands of people could still be able to claim back any such overpayment.”
The estimations were made using a combination of IHT breakdowns from HMRC and monthly house price data from Land Registry.
NFU Mutual estimated the fall in the value of properties liable for IHT between probate valuation and eventual sale on a month-by-month basis over the last four years and therefore how much tax may have been overpaid.