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DAILY EXPRESS: IHT take up and huge interest rate charged on unpaid bills

Journalist: Sarah O'Grady, The Daily Express

ended 05. January 2023

The interest rate you pay HMRC on overdue inheritance tax is now 6% (2.5% above base rate). The figure is hidden in the small print of latest figures released. Taxman is also stepping up efforts to track down those bereaved families who have not paid either deliberately or by mistake (easily done as the system is so complicated). What are your thoughts on this?

5 responses from the Newspage community

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Mitul Pandya0
Managing Director at Charterwells
Although this is in line with the recent rises to the Bank of England's base rate, in practical terms, this is a big blow to taxpayers. In many cases granting of probate can take longer than the six months time limit. Also, once granted, executors typically do not own the assets in liquid form to be able to pay the tax together with the higher interest. Hence, there is the possibility of further delay.

Our concern is that given the current weakness in the property market, it may take longer to liquidate or obtain funding to pay for the inheritance tax with the larger interest component.
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Samuel Mather-HolgateVerified
Independent Financial Adviser at Mather and Murray Financial
The government make an absolute fortune from inheritance tax, and the threshold has been frozen for years and will remain so until 2028. The treasury expects to reap the rewards of these stealth tax increases and has given HMRC the giddy-up to ensure they get what they are due. Inheritance tax doesn't need to be complicated. Anyone can successfully navigate dealing with a loved one's estate and HMRC have got good guidance on their website. The best thing to do would be to get advice on your wealth whilst you are living and avoid paying this unnecessary tax altogether.
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Steven MatherVerified
Lawyer & Director at Steven Mather Solicitor
Pay the tax on time and you won't have to pay interest. Ouch right? But if you think 6% is harsh, make sure you pay your suppliers on time. Late interest on commercial debts is at 8% above base, so 11.5% interest per year. On a £10,000 invoice, that's nearly a hundred quid a month in interest. Chuck in compensation for late payment and some legal costs, and an unpaid bill will quickly mount up.
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Tahina AktherVerified
Barrister and Co-Founder at Wildcat Law
For many, the probate process can be very daunting and it comes at a time that, emotionally, many executors are least able to cope as they are dealing with the loss of a loved one. The numerous IHT forms that need completing and calculations that need to be done make this even harder. It is easy to make a mistake. The consequences of making a mistake can be expensive to both the beneficiaries but also to the executors personally. In the case of managing probate and IHT bills, a penny saved is often many pounds cost. Seeking advice and help at an early stage from a solicitor can save you a lot of stress and ultimately may save you a large tax penalty.
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Austyn JohnsonVerified
Founder at Mortgages For Actors
Tax, more tax and then tax when you die. Complicated systems and interest on fees are the polar opposite of what grieving families need. Instead of paying someone to 'track them down', the Revenue should spend the money putting processes in place that make the whole IHT tax experience a lot easier. But then that would be common sense.