Rising prices put HMRC on inheritance tax alert
|Author: Craig Bees||Published: 23rd November 2021 09:02|
Increasing house prices has encouraged HM Revenue and Customs to launch huge numbers of probes into Inheritance Tax payments.
According to law firm Pinsent Masons, HMRC opened 3,574 investigations into IHT in 2020-21, securing an additional £254m in revenue, and the situation for individual homeowners is allegedly made worse because many handle their family’s estate affairs without professional assistance.
This month HMRC revealed IHT receipts for the first half of 2021/22 were £3.1 billion.
Pinsent Masons says that the average investigation generated £71,000 for HMRC, making pursuit of the tax very attractive; now, dramatically increased house prices have led to growing numbers of people coming within the scope for IHT.
This is largely due to the nil rate band, the threshold above which IHT must be paid, remaining at £325,000 since 2009 without any adjustment to account for inflation.
"HMRC will be focused on clawing back unpaid taxes to help pay for the enormous sums of public money spent on Covid support schemes,” says Pinsent Masons. “With the average investigation generating a yield of £71,000, IHT compliance is clearly a profitable area for them and we can expect to see an increase in investigations.”
In the recent Budget there was no change announced for IHT whilst over recent years various recommendations have been made for the reform of IHT from the Office of Tax Simplification and an All-Party Parliamentary Group of MPs.
Watch this space.
Meanwhile, good news for landlords in the budget with the news that they will now have twice as long to pay Capital Gains Tax as the window is being doubled from 30 to 60 days.
The ruling applies to UK and non-UK residents who sell property, while the change has immediately come into effect. Chancellor Rishi Sunak made the change after being warned by the Office of Tax Simplification in May that some taxpayers only find out about their obligations after they have sold their property.
The announcement has attracted a positive reaction from accountants as the 30-day period was seen as a small window to register, work out how much to pay and pay the tax.
The 30-day rule came in April last year (2020), replacing a system where gains could be reported in a self-assessment tax return in the tax year after the property was sold.
The details of the Capital Gains Tax change were in the Budget documents, saying: “This will ensure that taxpayers have sufficient time to report and pay CGT, as recommended by the Office of Tax Simplification.”
No other changes were made to the tax, despite speculation that CGT rates could rise to fall in line with income tax, which goes up to 45%, as was proposed by the Office of Tax Simplification last November.
The tax rise could have presented the final tipping point for landlords to sell their portfolio. The avalanche effect of this would have meant a subsequent decrease in rental properties during a time when UK tenants are already facing a shortage of suitable homes within their budget.
Currently higher or additional rate taxpayers pay 28% CGT on gains from residential property, though basic rate taxpayers pay less depending on the size of the gain and their income.
BADBY & FARTHINGSTONE CC CELEBRATE 2021 SEASON AWARDS
Another well-attended and successful event for the club at their recent annual presentation night held in Badby Village Hall near the ground.
With food and refreshments in hand, the club celebrated another successful season with an evening of speeches and presentations. Special thanks to Peter Mayne for his inimitable View from the Boundary speech, chairman Andy Nightingale and family for providing a tasty curry and captain Charlie Ashmore for delivering an entertaining summary of the season.
The main business of the evening was of course the awards … and the winners for 2021 were:
- Batsman of the Year: Steve Nelligan (376 runs, average of 47)
- Bowler of the year: George Dicks (9 wickets, average of 9.67)
- Wildfowl Duck Award: Andy Nightingale (4 ducks)
- Young Player of the Year: Alfie Dicks (84 runs, 2 wickets, 2 catches)
- Captains Award: Ed Hall, Graeme Whitcroft White, Andy Nightingale (shared award)
- Players Player: Steve Nelligan
- Clubman of the Year: Phil Hall and Peter Collins (shared award)
Monthly draw: this Friday sees the deadline for November’s draw so why not make December your chance to win a case of Italian wines (red/whites/mixed)?
How To Enter: every valuation and instruction for sale or rental between now and Wednesday December 22 will be entered, the winners being notified by e-mail.
So, if you’re thinking of selling or letting your property and want to win this great prize call (01327) 359164 and speak to our sales or lettings team.
Craig Bees, MD Bartram & Co
Tel: (01327) 359164