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Apr. 28, 2015

Amount of inheritance tax claimed by HMRC increases

Statistics have shown that the amount of inheritance tax claimed by HMRC increased from £2.9bn in the tax year ending April 2012 to £3.1bn in the tax year ending April 2013.

A study by the accountancy firm UHY Hacker Young Accountants found that the increase was primarily down to HMRC successfully challenging the valuation of estates more frequently. Last year HMRC bought in £108 million through challenges to valuations, this is compared to just £88 million the previous year.

Challenging the valuation of properties looks set to remain valuable to HMRC as house prices continue to rise into 2014. As house prices continue to rise, many people are finding that the value of their estate is creeping over the inheritance tax threshold.

Challenging the valuation

HMRC state that they carry out routine checks on property valuations to confirm the value that has been given.

According to the study by UHY Hacker and Young, HMRC use the Land Registry records of sale for the property in question and other similar properties in the area to check that the valuation is accurate.

UHY say that HMRC look to see if there have been any extensions or refurbishments since the property was valued. They may also investigate further if the property’s value seems low compared to the price that the deceased paid for it.

It’s important that you check whether you and your property are liable to IHT and plan carefully to make sure that your estate is handled in a way that is the most tax efficient for you and your beneficiaries. Writing a will is the most important first step that you can take.