Inheritance Tax Relief For Estates

• Published date: 28 September 2020
• Subject Matter: Tax, Income Tax
• Law Firm: Gilson Gray
• Author: Lynne Regoubi

We have highlighted previously how Coronavirus has had an impact on many things in relation to the administration of a deceased's estate. With our advice clients are adapting how they do things and, due to the current unpredictability of the situation the world finds itself in, we are constantly reviewing ways in which we can help progress matters for our clients during this time.

We are seeing a rise in the number of estates where asset values have fallen dramatically since date of death, mainly due to the unpredictability of stock markets. Because of this, it is important that executors are aware that, where inheritance tax was paid based on at the date of death value and that value has fallen it is possible to claim some relief.

By way of example:

Ms A's estate at date of death included:-

• A house valued at '400,000
• Cash in bank of '50,000
• An investment portfolio valued at '200,000

After the allowances which the estate was able to claim, inheritance tax of '60,000 was due and paid six months after deat.

However, the property sold on the open market for '340,000. As such a sale was within 4 years of death, the sale value can be substituted for the date of death value, meaning '24,000 of inheritance tax can be reclaimed.

Similarly, because of volatile stock markets, the shares were sold for '150,000. This sale was within 12 months from date of death and created another loss. As the shares were all qualifying...