More than £5.2 billion in inheritance tax (IHT) was paid in the last tax year – the highest figures ever recorded.
Official statistics from HMRC's latest monthly estimate have revealed the unprecedented amount is an increase of £400 million on the previous tax year.
But it appears that not all those entitled to claim the new IHT allowances have been taking advantage of these, leaving them with a higher than necessary IHT bill – in some instances, families could be paying as much as £40,00 extra.
According to a Freedom of Information request from NFU Mutual, HMRC figures show that only 3,065 taxable estates claimed the family home allowance by the end of the 2016-17 tax year. NFU Mutual estimates that 24,000 estates paid IHT in the last tax year. Sean McCann from NFU Mutual said, “By our estimates, around 20,000 estates paying IHT did not claim this new [residence nil-rate band] relief”. It is worrying that HMRC may be receiving more than is due from grieving families.
With the recent pledge from The Chancellor of the Exchequer to look again at inheritance tax, there are those that have called for IHT to be simplified or even removed completely – there is no doubt that IHT is deeply unpopular.
There has been a recent growth in executors attempting to “DIY” the probate forms and estate administration – this could explain why the allowable tax allowances haven’t been fully claimed. The IHT forms are complex and confusing, and it would not be surprising if DIY representatives haven’t quite gotten to grips with the calculations or been fully aware of any entitlement to claim the residence nil-band relief. Oratto offers a fixed fee probate service; this service also includes the probate solicitor completing the IHT forms. Using this service could ensure that families receive their full IHT allowances and therefore enable them to have more of the estate to enjoy.
Contact Oratto on 0845 3883765 to speak with an adviser or use our contact form to arrange a call-back.