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Can you claim back overpaid inheritance tax?

The most common reason for an inadvertent overpayment of inheritance tax is either an overvaluation of assets at the date of death or a subsequent drop in the value of assets (most commonly property or shares).

This can be frustrating for executors and even more so for beneficiaries who ultimately feel short-changed. Fortunately, in most cases it is possible to claim back overpaid inheritance tax.

If the assets at issue were shares or investments such as unit trusts which have been sold within 12 months of the date of death, the executors can reclaim the excess inheritance tax. If the overpayment was related to a drop in the value of the deceased’s property, a rebate for the overpayment may be claimed by the executor/s provided the claim is made within 4 years of the tax being paid

Points to note:

  1. Only the executors can sign the claim form

  2. The deemed date of sale for property is the date contracts are exchanged.

  3. The relief is based on the gross sale price of the property

  4. You can only claim relief if the sale price differs from the value on death by £1000 or 5% of the value on death, whichever is lower

If you have any questions about inheritance tax or general estate administration, please contact Alex Livesey or Paul Solomons, who will be happy to offer their expert advice, on 01202 802807

#InheritanceTax #inheritancetaxexemptions

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