A person died before the coronavirus lockdown and the estate has already payed inheritance on higher share values or property values to secure probate (probate is not usually granted until the inheritance tax liability has been paid).
Coronavirus hits the globe, lock down starts and stock market collapse in February and March 2020.
Probate has been granted and now the executor or personal representatives can distribute the estate.
The estate is now lower than the value that the taxes were paid on.
As it now a lower value when sold/transferred what happens?
Property lower value: The executor can contact HMRC, prove the property sold at a lower value than estimated (provided not sold to a friend or relative) and HMRC will adjust the inheritance tax bill and issue a refund of overpaid taxes to the estate.
Shares lower value: This is a dilemma for the executors and beneficiaries.
We suspect in most cases, and probably what is most equitable, is to adjust the estate value and liability for inheritance tax and seek a refund of inheritance at 40% given that capital gains rates are only at 10% and 20% for shares and 18% and 28% for property