Inheritance tax (IHT) is payable on a person’s estate after they have passed away, meaning those left behind are responsible for dealing with the bill. The levy is set at 40 percent, and is charged on the value of a person’s estate above a particular threshold – usually £325,000. In recent years, the levy has come to be viewed as a “death tax” and somewhat controlling of a person’s income before death due to a set of gifting rules.
“The government should cut unnecessary spending before raising taxes.”
And another commented: “Probably the most disgusting money grabbing scheme ever invented by the government.
“Pay taxes all your life, and then pay to die!”
The opinions expressed by readers come as a recent Freedom of Information request revealed interesting information about Inheritance Tax.
Her Majesty’s Revenue and Customs (HMRC) were found to have made 9,864 IHT repayments in the 2019/20 tax year.
This was observed as a 66 percent increase on the 5,949 paid in the previous tax year.
Repayments can be made for a number of reasons, however, there are some important issues to consider.
A little-known tax rule means refunds on losses are available, and certain families will be able to claim back Inheritance Tax.
This is an issue which appears to have been exacerbated by market turmoil in the midst of the ongoing pandemic.
Elizabeth Neale, Partner at BDB Pitmans, commented on Inheritance Tax repayments.
She said: “There are various reasons why repayments may be made and no further detail on the nature of the repayments is available.
“They may reflect changing asset values or exemptions and tax reliefs being allowed. The increase in the number of repayments could also reflect changes in HMRC administrative processes.”
But IHT can be complex, and it is important for Britons to understand how the tax system works.
Ms Neale added: “Broadly speaking, IHT is designed and administered so that where assets are realised by the executors within a reasonable period of death IHT is charged on the sale price, rather than the value at death.
“This is because for many asset classes, such as property, valuation is an art and not a science and their value is a matter of opinion and negotiation.
“HMRC generally considers that actual sale price is the best evidence of the value at death.
“But if there is a sale within the prescribed time period of quoted investments or land at a loss compared with the value agreed, then statutory loss relief can be claimed.
“This is particularly useful for property which may take time to sell but in extreme cases there can be no relief, even where it is clear the value agreed was too high.”