Shortfall in Life Insurance payout to estate

WinchesterExecutor

I'm executor to my uncle's estate.

The life Insurance company provided a value of the policy {about £130k] on date of death and I duly declared this on the inheritance tax forms and paid tax on it as the estate was large enough to incur tax.

However, the insurance company have paid a 'claim value' based on the date when I called to tell them my uncle had died which was 14 days after the date of death. That value is just over £2000 less because the value of the investments have gone down.

So I've paid £800 in IHT on £2000 that the estate is not receiving.

HMRC say 'that's the way it is'. The IHT valuation is correct at date of death. The payout isn't a capital loss so it can't be set against gains.

Is it just hard luck?

thanks
Rob

agrinnall

I think HMRC are probably right from what I've seen previously on here. It's annoying but a small amount in the grand scheme of an inheritance that must be at least £327,000.

jeffnail

Yes however you can make a formal appeal and see if you can get this back

WinchesterExecutor

Thanks very much for that advice. It confirms my reading of the rules. You win some, you lose some. But HMRC usually wins!