HMRC looking into inheritance tax valuations

HMRC is now carrying out more investigations into inheritance tax valuations which might lead people to seek the advice of an accountant experienced in inheritance tax planning.

UHY Hacker Young recently published research that showed that HMRC conducted 9,368 investigations in 2010. As a result, the government raked in an extra £70 million in taxes, at an average £24,600 per case.
Mark Giddens, a tax partner at UHY Hacker Young’s London office explained that it isn’t only millionaires who are affected by inheritance tax. A large number of people in middle England who own an average sized home could find their estate liable to inheritance tax.

Many people do not hire a professional to administer the estate, rather they do it themselves. But if they undervalue a property by £20,000, they could find they have to pay an extra £8,000 tax plus a penalty of 30%. The overall sum would then be £10,400 which could be difficult to raise if the estate and the beneficiaries are not cash rich.

The current threshold before inheritance tax kicks in is £325,000. Everybody is allowed to leave an estate valued up to that amount without it being taxable. However, anything over and above the threshold is taxed at 40%.

A spokesman from HMRC said inheritance tax only affects around 3% of estates but in cases where a property’s value can affect the amount of tax due it’s only right that we should confirm the value. He claimed it was not an investigation as such but a routine check that usually confirms the value.

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