Inheritance Recovery Specialists
In the article “The secret inheritance tax rebate you could claim (thanks Trump)” published on the 19th April the Times highlighted how the recent market turmoil and almost universal drop in share prices could have “slashed millions off the value of investments, some estates will have paid too much tax” impacting the value of share assets held in estates for many families.
The article evidences the risk of holding share assets in estates long term, Share prices can go down as well as up, and such unexpected market events can leave the estate vulnerable. For the Executor there is also personal risk, especially after Probate has been obtained, that holding financial assets “for the benefit of the estate” can create for if losses are incurred or for an Executor who has not located assets that lose value.
The article does however offer support and guidance for those who have paid Inheritance Tax (IHT) on assets which have lost value. Where shares have lost value the article states “if the value of those shares has dropped from the price they were assessed at for IHT, the executor can claim what is known as “loss on sale relief””
Loss on Sales Relief is not limited to share assets and can be used to recover IHT paid on property or other assets that lose value. The relief allows executors to update the value of the listed investments given to HMRC at the date of death with the price that they were sold for. This recalculates the IHT bill and HMRC will refund any overpaid tax.
Example
Someone died with shares valued at £200,000, assuming that they were all taxable for IHT at 40 per cent. The IHT bill from HMRC would be £80,000. If the shares dropped in value by 10 per cent and were sold at £180,000, the executor may be able to claim £20,000 loss on sale relief and be entitled to an £8,000 IHT refund.
However, the relief only applies to shares sold within 12 months of the date of death and executors must make a claim within four years after the end of that 12-month period.
For more information visit the HMRC website at
Inheritance Tax: claim for relief - loss on sale of land (IHT38) - GOV.UK