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Data released by a Freedom of Information (FOI) request made by financial advisers NFU Mutual to HMRC has revealed that there were 6,262 reclaims made in 2020, an increase of 763 from 2019.
Inheritance tax is assessed on the value of a person’s estate on the date of death, with the tax due to be paid within six months. If it is found upon the sale of any property or shares that the value has fallen, the overpaid tax can be reclaimed.
An automatic credit cannot be made however, and the claim must be proactive.
Sean McCann, Chartered Financial Planner at NFU Mutual, said that the figures appeared to suggest more people were becoming aware of the opportunity to reclaim overpaid inheritance tax, and urged families to check whether they could be eligible to make a reclaim:
“If house prices start to fall in 2021, it’s important families who have recently paid an inheritance tax bill are aware of this ability to reclaim, which could save them thousands of pounds.
“Even small percentage falls in property prices can lead to significant amounts of tax being reclaimed. Inheritance tax is charged at 40% so if a property were to fall in value by £10,000 this could mean up to £4,000 could be reclaimed.”
NFU Mutual also pointed out that despite a buoyant property market in 2020, there were a total of 4,419 reclaims on loss of property value, nearly 600 more than in 2019.
In addition, a turbulent year in the stock market meant there were a total of 1,843 reclaims for shares sold at a lower value – a small increase from 2019.
“Many of these claims will relate to tax liabilities created in previous tax years, given the time permitted to make a claim following an IHT-liable death.”