HMRC takes record income from death tax raids on grieving families | Personal Finance | Finance

The levy is increasingly being targeted by an HM Revenue and Customs (HMRC) team. Raids by HMRC scooped a record £326million last year.

In another hit on bereaved families, from today the interest charged on unpaid death duties will reach a high of six percent.

Since 2011, the taxman has charged 2.5 percent above the Bank of England base rate on outstanding payments.

For years the Bank’s interest rate has been at record lows. But in the fight against soaring inflation, it has climbed over the last nine months to 3.5 percent.

This means families dealing with Inheritance Tax (IHT) payments – one of the most complex areas of UK duty – will face bigger bills for any errors.

Barrister Tahina Akther, founder of Wildcat Law, said: “For many, the probate process can be daunting and it comes at a time that, emotionally, many executors are least able to cope as they are dealing with the loss of a loved one. The numerous IHT forms that need completing and calculations that need to be done make this even harder. It is easy to make a mistake.

Demands “The consequences of making an honest mistake can be expensive to both the beneficiaries but also to the executors personally.”

Mitul Pandya, of the accountancy firm Charterwells, warned that many families will not have the money to pay any IHT demands until after properties are sold and, as the market slows, that could take longer.

Meanwhile, their interest rate penalties will be racking up. He said: “This could be a big blow to taxpayers.”

Meanwhile, the taxman has stepped up efforts to seize money from families who underpay their inheritance bill, either deliberately or via an honest mistake.

The amount raised by investigators in the year to March 2022 was 28 percent higher than for the previous 12 months, according to data obtained by insurer NFU Mutual through a Freedom of Information request.

The HMRC team is targeting wealthy individuals – which it defines as the 800,000 in Britain with an income above £200,000 or assets of more than £2million.

Last year HMRC opened 4,258 cases into families who owed IHT, up from 3,574 the year before.

The standard IHT rate is 40 percent of anything in an estate above the £325,000 threshold.

HMRC is to receive £79million over five years to recruit extra staff to tackle tax compliance.

A spokesman said: “The interest we charge and pay delivers fairness for all.”