Inheritance Tax refunds (loss relief) – reminder for executors

The Telegraph has reported that nearly 15,000 executors applied for Inheritance Tax (IHT) refunds known as loss relief because properties have sold for less than the probate valuation.

The Telegraph reported that in 2016-17 there were 2,177 claims for loss relief.

IHT must be paid either in full or by electing an instalment option before a grant of probate can be applied for. As such, the estate can end up paying too much IHT before the property is sold, resulting in a claim being made for a refund of the IHT.

It is thought that a stagnant property market and falling house prices are to be blamed for the increase in loss relief claims. As such, it is advisable for executors to review the estate to see whether a claim for loss relief can be made by applying to HM Revenue & Customs as this will increase the value of the estate distributable to beneficiaries. This would involve reviewing the probate value against the sale value. Any loss will see a refund of IHT on the difference between the two figures.

For more information about making a claim for loss relief, please contact a member of our Private Client team.

This content is correct at time of publication