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Don’t overpay Inheritance Tax


The rise in property prices over the past decade, have taken the estates of many individuals over the Inheritance Tax threshold (currently £325,000). Where the values of estates exceed this limit on death then 40% Inheritance Tax is generally payable. The calculation of the Inheritance Tax payable will in part be based upon an estimated valuation of property within the estate, of which the largest is often the family home. As the valuation can often be an estate agents marketing valuation this can be overstated and result in too much Inheritance Tax being paid.

The current downturn in the market can mean that many properties are ultimately being sold at prices significantly less than the estate agents first estimate. It can be difficult to be any more accurate when calculating the Inheritance Tax, as the property can take a long time to sell, often after the Inheritance Tax on the estate has been calculated and paid over. Generally if the property is sold within four years of death to an unconnected party it is possible to make a claim to reduce the value used in the estate, and use the eventual sale value. HM Revenue and Customs would then repay the excess Inheritance Tax paid.