Thousands of British homeowners could be due an inheritance tax rebate, according to research from a financial service provider. An estimated 21,000 estates could be owed an average of £4,260 because the beneficiaries were not fully aware of how the probate system operates.
With around £90 million overpaid by homeowners, how can you work out if you are due something back?
Inheritance tax is based on the value of a property when the owner dies. If it sells for less than the valuation within four years of death, the beneficiary is entitled to claim back some of the inheritance tax paid. It is a little-understood rule that seems to have left many out of pocket.
Because of falling house prices in many parts of the UK, NFU Mutual believes thousands could be in this position. Prices have dipped by around 11 per cent in four years.
Anyone who inherited property from June 2008 to February 2009 and June 2010 to August 2011 are the most likely to be in line for a rebate, the financial services firm says.
Sean McCann, personal finance specialist at NFU Mutual, comments: “Many people don’t realise that they can claim back inheritance tax if the property they inherit sells for less than it was valued at during probate.
“And with house prices generally falling across over the last four years, thousands of people could still be able to claim back any such overpayment.”
The study, which was based on a combination of inheritance tax data from HM Revenue and Customs and monthly house price data from Land Registry, highlights that it is not just the person making a will who needs to understand the probate system.
NFU Mutual estimated the amount of overpaid tax based on the fall in the value of properties liable for inheritance tax between probate valuation and eventual sale on a month-by-month basis.
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Published on: June 11, 2012