Individuals should be mindful of Inheritance Tax reliefs
The rising value of house prices in the UK means that an ever growing number of people are finding that their estates are liable to Inheritance Tax (IHT). A recent study revealed that the amount of revenue that IHT generates now stands at £4.72billion (up from £2.47billion in 2010).
With this in mind, it is important that individuals are aware of the various tax reliefs which may limit their estate’s liability, not least those which relates to losses on the sale of assets.
If any investments or land which are included in an estate are subsequently sold for less than their probate value, then their personal representatives may be able to claim relief.
The relief works by enabling the personal representative to substitute the sale price for the probate value and to claim a refund on the difference.
It is important to bear in mind that the system for relief operates differently depending on whether the losses incurred relate to the sale of land or quoted shares.
For the relief to apply, shares must be sold within one year of the date of death and the land within four years.
Before applying for either relief, it is important to have done the necessary calculations to ensure that it is the best course of action.