Falling house prices ‘could fuel IHT reclaims’

Families could claim back thousands of pounds in inheritance tax (IHT) following the latest slump in house prices, a financial advice firm has highlighted.

Data released this week by the Office for National Statistics revealed that house prices in southern England (across London, the east of England, the south east and the south west) fell by an average of 0.9% in the year to July 2019.

The most acute effect was felt in the north east of England, where house prices dropped by 2.9%. In the south east region prices also fell by 2% over the past 12 months, while London saw a dip of 1.4%.

Inheritance tax is charged on the value of assets at death and must be paid before the estate can be handed over. But if executors sell a property for a lower value within four years of the death, they can reclaim the tax paid on the loss through an IHT38 form, NFU Mutual has explained.

With house prices now falling in many areas of the country, this potential rebate could affect thousands of people. And the rule also applies to shares and some other investments sold within 12 months of death, where IHT paid on any loss can be reclaimed through an IHT35 form.

NFU Mutual chartered financial planner, Sean McCann, said: “Many families are missing out and paying more inheritance tax than they need to. When property prices and share values fall, rebates are not given automatically and need to be proactively claimed. Those that opt for DIY probate are not always aware that IHT can be reclaimed in this way.”

He added: “With over half of all estates paying IHT falling in London and the south east, those living in and around the capital – where house price falls have been the most dramatic – should ensure they don’t miss out on any potential rebates due.”

A Freedom of Information request also obtained by NFU Mutual revealed that in each year from 2010/11 to 2016/17, there were between 2,000 and 3,000 successful claims through IHT38.

    Share Story:

Recent Stories


Helping landlords make their cash work harder
MoneyAge Editor, Adam Cadle, talks to Family Building Society BDMs, Arif Kara and Nathan Waller, about the resilient BTL market, the wide variety of landlords that Family Building Society caters for, and how niche products like an Offset mortgage can help improve cashflow.

An outlook on the BTL market
MoneyAge Editor, Adam Cadle, talks to Landbay senior regional account manager, Alex Witham, about current market sentiment within the BTL space and Landbay’s success in this area

Empowering advisers: A decade of education in Later Life Lending with Air Academy
Michael Griffiths is joined by chairman of Air Club and former founder and CEO of Air, Stuart Wilson, and head of the Air Academy, Daniel Holden, to look back on a decade of business focused learning at the Air Academy.


FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.