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Inheritance tax rebates linked to falling house prices

19th September 2019

Falling house prices around the UK could potentially lead to a rise in claims for inheritance tax rebates, a report has claimed.

Inheritance tax is currently charged at 40% on the part of an estate that exceeds the £325,000 threshold.

This threshold can be increased to £475,000 if a family home is left to any children - including adopted, fostered or stepchildren - or grandchildren in 2019/20.

Tax rebates may be available if any property that was included in the deceased's estate was sold at a loss within four years of death.

Figures from the Office for National Statistics show that house price growth has continually slowed since June 2016.

Sean McCann, chartered financial planner at NFU Mutual, said:

"When property prices fall, rebates are not given automatically and need to be proactively claimed [using an IHT38 form].

"Those that opt for do-it-yourself probate are not always aware that inheritance tax can be reclaimed in this way.

"Over half of all estates paying inheritance tax are in London and the South East and those living in and around the capital, where house price falls have been the most dramatic, should ensure they don't miss out on any potential rebates due."

A Freedom of Information request revealed there were between 2,000 and 3,000 successful annual claims through IHT38 between 2010/11 and 2016/17.

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