Bereaved families have paid £2.28m ($2.9m, €2.7m) in inheritance tax penalties in the last tax year, a freedom of information (FOI) request from NFU Mutual has found.
This means the value of inheritance tax penalties has increased by more than half in the past two years.
In 2021/22, the amount paid was £1.7m, which means there has been a 34% increase in the amount paid by families compared to 2022/23.
|
Year |
Penalties |
|
2016/17 |
£1.70m |
|
2017/18 |
£1.93m |
|
2018/19 |
£1.26m |
|
2019/20 |
£1.49m |
|
2020/21 |
£1.46m |
|
2021/22 |
£1.70m |
|
2022/23 |
£2.28m |
Source: NFU Mutual/HM Revenue and Customs
Complexities
Sean McCann, chartered financial planner at NFU Mutual, said: “This increase suggests the complexities of inheritance tax are catching more people out and leading to higher penalties. The rising value of property and other assets may have contributed to families underestimating values.
“Many are also not aware of the need to include gifts made by the deceased in the seven years before their death, or those where they continued to enjoy a benefit from. HMRC have access to a wide range of data sources, including land registry sales information, which allows them to cross reference against the information on the inheritance tax return.
“These figures show that HMRC don’t hold back where they suspect inheritance tax has been underpaid. Thanks to the deep freeze of inheritance tax thresholds, more families are being dragged into the net and those with an inheritance tax liability are paying more.
“There are a number of ways to legally mitigate inheritance tax bills and speaking to a financial adviser can help families put in place an effective plan.”
