HMRC defends inheritance tax "streamlining"

Tax payments for private wealth management customers could be affected by recent changes from HM Revenue & Customs (HMRC).

The UK tax authority has modified the rate of interest charged both for late customer payments of inheritance tax - and for the rate at which it pays back inheritance tax it has previously overcharged customers.

Current law states that families must pay HMRC a 40 per cent levy on assets held in a deceased person’s estate worth above a threshold of £325,000.

Those who have not paid up within six months of the death will now face additional interest of three per cent, where previously the rate stood at zero.

This increase comes despite the Bank of England base rate, which the late payments rate usually tracks, having been unchanged since March 2009.

Meanwhile, HMRC have lowered the overpaid tax rate to 0.5 per cent.

A spokesman for the tax authority said that the new rates had been consulted on for the past 18 months.

’Interest is not a penalty but compensation for tax paid late,’ he added.

’We are streamlining the rates charged and paid for interest to simplify and make things fairer for customers.’

The changes come into effect in September. ADNFCR-2318-ID-19315523-ADNFCR