Inheritance Tax Warning As Brits Face Shocking Interest Rate Bill – “Very Unfair!” “| Personal Finances | Finance
40 percent inheritance tax is chargeable, and for some people, the smart decision is to pay this in installments. However, people should be aware that interest is charged by HM Revenue and Customs (HMRC) if a person does not pay the IHT bill by a certain date. The executor has six months from the end of the month in which the person died to pay the inheritance tax due, after which interest is charged on the amount of tax due.
However, a senior expert expressed frustration with the policy, especially since the administration of estates is often tied in knots for the British.
Express.co.uk spoke with Michael Culver, President of Solicitors for the Elderly and Founder of Culver Law Ltd.
He said: âWhen you think of inheritance tax, I always think it’s a huge issue that people have to pay interest within six months of the end of the month of death.
âIt’s really, really frustrating, especially during COVID-19, that they haven’t had any extenuating circumstances to prolong this at all.
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“But in the majority of cases, where maybe the house is the primary asset, you can’t pay the IHT until you are able to sell the property.”
However, regardless of personal circumstances, Mr Culver said the interest would show up within a “very tight deadline.”
He continued, âIt’s very unfair – indeed, one of the most unfair things about inheritance tax.
âInterest comes in so quickly for inheritance tax. Whereas, for income tax, you have until January 31 after the end of the tax year concerned before having to file your tax return and before tax is applied before.
âThey give a lot more time in a person’s life when they usually have their affairs in order and might have an accountant to help them.
âWhereas in death there is less time, and as executor, a lot of you have to figure out what someone had.
âThere are problems with the probate registry and delays, which means a person can’t even put the house up for sale, let alone find a way to pay for it.
âHowever, the tax authorities are already knocking on your door to charge you interest. “
Mr Culver says the six-month grace period for paying inheritance tax has been set at that level for a long time.
It appears that incomes have not budged to change that, even with a sad increase in deaths from COVID-19.
This, he warned, is likely to increase the backlog of probate services even now, compounding the problem.
He concluded, âYou might have eight or nine months before you can even market the property, and then it might take another six months to sell.
âAt this point, you’re past the year mark, so you might have another inheritance tax payment due with more interest accrued.
âThis is why it is so important to try to get your own house in order as soon as you can. “