According to The Times, HM Revenue & Customs (HMRC) is investigating over 2,000 families this tax year for possible inheritance tax underpayments.
HMRC opened 2,029 investigations between April and November alone, recovering £172 million. This is part of a larger trend – with over 3,100 investigations and £251 million recovered in the previous tax year.
The Times said that the Treasury is expected to raise £7.6 billion from inheritance tax in 2023-24, an increase of £500 million from 2022-23.
If the donor lives for seven years, gifting can be done tax-free under the seven-year rule. HMRC examines gifts closely to stop underpayment or avoidance. 7.75% interest is charged on over-due taxes.
Taxpayers can make recurring income-based gifts of up to £3,000 per year without it affecting their future IHT obligations, nor will it lower their standard of living. Additionally, parents can gift up to £5,000 for a child’s wedding, £2,500 for a grandchild’s, and £1,000 to others.
NFU Mutual said:
“HMRC has substantial investigation powers if it suspects inheritance tax has been underpaid through error, omission or by undervaluing assets.
It will check other information sources to build up a picture of the deceased and their financial affairs — including bank statements or looking at income which may suggest the existence of undisclosed assets such as investments, property, or significant foreign currency transactions.
The rising value of assets and the potential sums at stake justify HMRC spending time looking at individual cases. The interest rate you pay HMRC on overdue inheritance tax could add a significant amount to those bills.”
If you would like any further advice, please do not hesitate to contact us:
3C Legal Limited
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info@3clegal.co.uk