Calculis not surprised by inheritance tax payments reform

The upcoming change in the interest rates paid by families on late inheritance tax payments is not a surprise, a top financial advisory service said today.

Calculis was reacting to news that HM Revenue & Customs (HMRC) is to charge interest of three per cent for people who do not pay off the levy within six months of the family member’s death.

Current inheritance tax rules state that a payment of 40 per cent of the deceased person’s estate should be paid for all assets above a threshold of £325,000.

The ins and outs of paying the tax also remain a mystery to many - with a Norwich Union poll taken earlier this year showing that one in five families likely to pay the levy in future do not know of this financial obligation.

Alex Pegley, director of Calculis, said that the government had made the change to the rules in order to help fund its public deficits built up in the recession.

Current official forecasts suggest that £175 billion will be added to the national debt this year.

’This is just a way to increase the state tax take a little bit really and is a nice easy way of doing it and shouldn’t ruffle any feathers,’ Mr Pegley said.

’It may only have a small impact but it all helps at the minute as far as the government’s huge current budget deficit is concerned.’

HMRC also announced that it will be reducing the interest it pays back to families who have overpaid on inheritance tax to 0.5 per cent. ADNFCR-2318-ID-19320210-ADNFCR