More IHT Due?

Runner_Duck

We had two purchasers keen to buy and have been fortunate enough to sell my late Mother's house for ~£16K more than the average value quoted in the IHT forms.  Do we need to inform the HMRC of this and pay more IHT?
Thanks for your thoughts.

Keep_pedalling

You will definitely need to inform HMRC because either IHT or CGT needs to be paid on this. Which one is a bit of a grey area, how much did the house sell for and how long ago did your mother die? £16k increase on a £800k house a year after death is not likely to be to involve more IHT but would involve a small sum of CGT. The estate gets a £6000 CGT allowance and you can subtract the selling costs from the gain. 

Olinda99

I think I am right in saying that HMRC will treat any increase in value over the amount declared when probate was applied for as a capital gain rather than additional inheritance tax

Keep_pedalling

Olinda99 said:

I think I am right in saying that HMRC will treat any increase in value over the amount declared when probate was applied for as a capital gain rather than additional inheritance tax

In this case that is probably true, if we were talking £50k difference they may challenge the original valuation especially is a RICS survey had not been carried out.

Runner_Duck

Keep_pedalling said:

 how much did the house sell for and how long ago did your mother die? 

Mum died December 2022, valuation of house was £1.133 mill and it sold for £1.15 mill so an increase of £16,667.  Selling costs (estate agent and solicitors fees) were £15,850, so if the estate has a £6k allowance we might not have anything to pay

Keep_pedalling

Certainly no CGT, and I very much doubt if HMRC are going to be chasing you for any more IHT for such a small increase over the estimate. Unless you are the sole beneficiary probably best to hold back a bit of cash from distribution for 6 months just incase.