House price rises prompt HMRC to launch Inheritance Tax probes
Increasing house prices has encouraged HM Revenue and Customs to launch huge numbers of probes into Inheritance Tax payments.
According to law firm Pinsent Masons, HMRC opened 3,574 investigations into IHT in 2020-21, securing an additional £254m in revenue; the situation for individual home owners is allegedly made worse because many handle their family’s estate affairs without professional assistance.
Last week, HMRC revealed IHT receipts for the first half of 2021/22 were £3.1 billion.
Pinsent Masons says that the average investigation generates £71,000 for HMRC, making pursuit of the tax very attractive; now, dramatically increased house prices have led to growing numbers of people coming within the scope for IHT.
This is largely due to the nil rate band, the threshold above which IHT must be paid, remaining at £325,000 since 2009 without any adjustment to account for inflation.
Pinsent Masons says:
“HMRC will be focused on clawing back unpaid taxes to help pay for the enormous sums of public money spent on Covid support schemes.
“With the average investigation generating a yield of £71,000, IHT compliance is clearly a profitable area for HMRC, and we can expect to see an increase in investigations.”
In last week’s Budget there was no change announced for IHT.
Over recent years various recommendations have been made for the reform of IHT from the Office of Tax Simplification and an All-Party Parliamentary Group of MPs.
Kindly shared by Estate Agent Today
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