• February 27, 2024
 HMRC investigates over 2,000 families for inheritance tax shortfalls

HMRC investigates over 2,000 families for inheritance tax shortfalls

More than 2,000 families are under scrutiny by HM Revenue & Customs (HMRC) this tax year for potential inheritance tax underpayments, as reported by The Times.

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.

The seven-year rule permits tax-free gifting if the donor survives seven years. HMRC scrutinises gifts to prevent underpayment or avoidance. Interest is levied at 7.75% on overdue tax.

Taxpayers can gift £3,000 annually without future IHT implications and make regular income-based gifts without impacting 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. Sean McCann from 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.”

First published on 7th February 2024.

Katie Johnson, Digital Journalist, Today's Media

Digital Journalist, Today's Media Contact: katie.johnson@todaysmedia.co.uk LinkedIn