Inheritance tax raid as HMRC claws back record sum through investigations | Personal Finance | Finance
Inheritance tax is charged at 40 percent of the value of a person’s estate above a specific threshold, usually above £325,000. People must pay the inheritance tax due on their deceased loved one’s estate promptly and in full.
When dealing with someone who has died, the executor of a will is legally required to complete a declaration for HMRC.
However, the Revenue can then open an investigation if it sees fit, either at random, or due to “red flags” raised when checking this declaration.
Investigations may come back clear, or could find someone has underpaid or submitted incorrect information.
However, both people who deliberately conceal money and make genuine mistakes are seen as legitimate targets for investigations.
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Previously a Treasury spokesperson told Express.co.uk: “The vast majority of estates do not pay inheritance tax – more than 93 percent of estates are forecast to have zero inheritance tax liability in the coming years.
“However, the tax raises more than £6billion a year to help fund public services millions of us rely on daily.”
In November 2022, Chancellor Jeremy Hunt announced his decision to freeze a number of tax allowances.
The amount an individual is allowed before inheritance tax is payable has now been frozen until April 2028.
This is an extra two years on top of the freeze Rishi Sunak enacted during his time as Chancellor.
Explaining the decision, Mr Hunt said: “We are taking difficult decisions on tax-free allowances. I am maintaining at current levels the income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds for a further two years taking us to April 2028.
“Even after that, we will still have the most generous set of tax-free allowances of any G7 country.”
The decision means more people are likely to be drawn into a tax bill as a result of fiscal drag.
Fiscal drag involves inflation or income growth moving people into a higher tax bracket.
With inflation soaring and tax allowances frozen, more people will have to consider an inheritance tax bill – when in the past, they may not have given thought to the levy.
This is likely to be compounded by rising house prices, which may see the assets of an individual be much higher than before.
An HMRC spokesperson said: “Our role is to collect the right amount of tax due under UK law. Cases are opened where we identify a risk of tax not being paid.”
