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Wills, Probate & Trust

Is your client due an Inheritance Tax Refund?

Inheritance Tax

Friday, November 1, 2019

In 2017 the Inheritance Tax Residence Nil Rate Band (RNRB) was introduced. The calculation of this allowance can be incredibly complex.  In fact, it is so complex that HMRC have actually been calculating the tax due from estates incorrectly in some cases.  This has in effect been corrected by changes introduced in the Finance Act 2019, which amend the RNRB provisions to make them less favourable for the taxpayer. However, these new rules only apply for deaths on or after 30 October 2018.  For estates where the death was between 6 April 2017 and 29 October 2018 inclusive, there may be a considerable tax refund due to the estate and its beneficiaries.

It is the responsibility of executors to ensure that the correct amount of tax is paid and that the beneficiaries of the estate receive the full inheritance due to them.

How do you identify if a refund is due?

If the deceased passed away during the period mentioned above, and all of the following apply, we would recommend that HMRC’s calculations are reviewed to see whether the law has been misapplied and a refund is due:

  • Inheritance Tax was payable
  • The downsizing element of the RNRB was claimed (this would be the case if the deceased’s property was worth less than the RNRB but they had either sold their home and moved into care or moved to a less valuable property on or after 8 July 2015).
  • The deceased’s property in respect of which the RNRB was claimed passed on their death partially as an exempt gift (e.g. to a surviving spouse) and partially to children or other direct descendants.

The Wills, Probate and Trust Team at Samuel Phillips Law are happy to speak to executors and their advisers to assist in identifying a tax refund is due to the estate. We will even offer a free initial assessment if suitable paperwork is provided to us.

Don’t forget, even if the above doesn’t apply, if an estate paid inheritance tax there are steps which can be taken within 2 years of death to reduce the tax bill. Get in touch with our specialist team to find out more.

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