Inheritance Tax UK: HMRC rakes in millions through IHT bill investigations | Personal Finance | Finance
Inheritance tax is a tax on the estate of someone who has passed away in the UK, usually set at 40 percent. It is payable on all amounts which fall above a particular threshold, which, for most, is £325,000. The tax must be paid on the value above a set threshold within six months of a person’s death, and this bill is usually taken as a chunk out of a person’s estate.
Unfortunately, though, Inheritance Tax is generally not well-liked amongst Britons, many of whom view the duty as a “death tax” or controlling of a person’s income.
And many Britons may be disappointed to hear HM Revenue and Customs (HMRC)’s earnings from Inheritance Tax investigations has only increased.
A freedom of information (FOI) request gained by the Telegraph revealed HMRC collected a total of £274million from over 5,000 investigations in the 2019-20 tax year.
Investigations usually take place to ensure people are declaring all of the details and funds necessary from a person’s estate.
READ MORE: Inheritance Tax UK: How a calculator could help you work out your bill
But it is thought that in many cases, people may simply be misunderstanding the rules, rather than deliberately attempting to mislead the Revenue.
There is normally no Inheritance Tax to pay firstly if the value of an estate falls below the £325,000 threshold.
Another instance where an IHT bill can be avoided is if everything above a threshold is left to a spouse, civil partner, charity or community amateur sports club.
But an important consideration Britons should note is laid out on the government’s website.
It reads: “If the estate’s value is below the threshold you’ll still need to report it to HMRC.”
This is because the Revenue will often need to double check the value of a person’s estate to ensure everything is in order.
Thankfully, though, the process of doing so is designed to be as uncomplicated as possible.
By logging on to the government’s portal contained on their official website, Britons can report the estate’s value.
Here they can find out whether they will be able to report everything online, or if they will need a paper form.
In addition, they can also discover if there is tax to pay and the deadline by which this should be met.
However, once this is done, Britons are urged not to get rid of particular records such as a will, copies of signed Inheritance Tax forms, as well as records showing how a person worked out the value of an estate.
HMRC can ask to see these records up to 20 years after Inheritance Tax paid, so this is an especially important point.