Nearly 5000 families received fines for paying Inheritance Tax late – how you can avoid getting caught out

Navigating the intricacies of Inheritance Tax is vital for families to avoid costly penalties and ensure timely estate administration.

Late IHT blog

4,865 executors were fined for paying their Inheritance Tax bills late in the year ending 31 March 2024 – a rise of 12% on the year to March 2023, and 41% on the year before.

Why are families facing fines on their Inheritance Tax bills?

An increasing number of families administering estates are facing fines due to delays in obtaining essential information about the deceased’s assets – particularly from banks.

These delays prevent families from completing and filing their Inheritance Tax (IHT) accounts with HMRC in time. This triggers a fine of £100 if the account is not received by HMRC within the year of someone passing, an additional £100 after 18 months, and up to £3,000 after two years.

In addition, families run the risk of interest being charged by HMRC on unpaid IHT. Interest begins accruing six months after the end of the month in which the deceased passed away and is currently charged at a punitive 7.75%.

What has caused these delays for families?

Some banks are becoming increasingly slow to respond to requests for information on the value of deceased people’s bank accounts. Some have even taken their information request portals – introduced during the pandemic to make requests easier – offline in recent months and have reverted to providing information only by post.

Another growing cause of delays is the increasing complexity and value of estates. Shares in private businesses, for example, can be slow, complicated, and expensive to value. The same applies to estates involving real estate, such as buy-to-let property portfolios.

These delays can significantly impact families applying for the Grant of Probate. The Grant application cannot be submitted until the IHT account has been filed with and acknowledged by HMRC. The average probate application took 12.9 weeks from the date of application in the first quarter of 2024, up from 10.8 weeks a year earlier and 8.8 weeks the year before.

Many assets, such as property, cannot be liquidated to pay IHT until probate is granted, resulting in accruing interest at a time when the executors cannot access the funds to pay what is owed to HMRC.

Dealing with IHT can be challenging, and we are increasingly seeing banks being uncooperative, leading to considerable delays, and unfortunately fines for families.

How TWM can help you

If you are navigating the complexities of estate administration and Inheritance Tax, our expert private client solicitors are equipped with the expertise and experience to guide you through the process.

For further details or to discuss your requirements, please contact our Private Client team today for an initial no-obligation consultation.

 

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Nearly 5000 families received fines for paying Inheritance Tax late – how you can avoid getting caught out

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