8 Finance Monthly. The Monthly Round-Up INHERITANCE TAX RECEIPTS REACH £2 BILLION FROM APRIL TO JUNE, UP £0.2 BILLION YEAR-ON-YEAR Inheritance tax receipts hit £2 billion from April to June 2023, according to data released by HMRC today. This is £200 million higher than the same three-month period last tax year. Years of house price increases, soaring inflation, and tax freezes have pushed an increasing number of families that would not consider themselves to be wealthy above the threshold for inheritance tax. In 2019/20 inheritance tax bills average over £200,000 for those who paid them, and the total inheritance tax take has increased since then – totalling £7.866 billion last tax year. But with asset prices falling, many families could find they’re overpaid. If properties or shares were valued back in 2022, but are only now being sold, there’s a strong chance you’ll be selling them for the less than the value on which you paid inheritance tax. The good news is that there is a way to claim back the overpayment Nicholas Hyett, Investment Manager at Wealth Club said: “HMRC continues to see its inflows increase, monthafter-month and yearafter-year. But as house prices start to fall, we may see beneficiaries paying more inheritance tax than they really should. Fortunately, there are two forms that can help you to claw back any of that overpaid inheritance tax: The ‘Loss on sale relief’ - IHT25 form can be used to claim back on the sale of qualifying investments such as shares. Lengthy delays in processing probate are making it difficult for people to claim and there are calls for ministers to extend the 12-month claims window. The perhaps lesser known - IHT38 form, which was used by just 3,000[4] people last year, allows you to claim back money on the sale of a property or land, to ensure beneficiaries are paying tax on the actual sale price and not its valuation at the time of death. Beneficiaries have four years from the date of death and could potentially save tens of thousands on some larger estates, especially now house prices are falling. Rumours that the government might be considering scrapping inheritance tax altogether could eventually clear up the backlogs. But the reality is that in some circles, inheritance tax is already considered a voluntary tax, thanks in large part to government sponsored schemes designed to encourage investment into crucial parts of the UK economy. Those concerned about inheritance tax should also consider; Giving money away early. Gifts taken out of regular income, which are not deemed to affect the giver’s standard of living, are inheritance tax free on day one – as are certain smaller gifts. Timing is key as you can give unlimited amounts away but typically these take seven years to be completely inheritance tax free. Of course, once you give away the money you’ve lost control. If you need it back for an emergency, that’s not an option. Investing in companies that qualify for Business Property Relief. These are typically inheritance tax free after two years. Investing in unquoted businesses can be risky, however, unlike giving the money away, you retain control. Investing in an AIM ISA. ISAs are not inheritance tax free. When you pass away, your loved ones could miss out on 40% of your hard-earned cash. AIM ISAs are a popular way around this. They are riskier but after two years they could be IHT free.”
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