IHTM31515 - Assessing: calculating interest: IT and CGT repayments
Where an estate includes the benefit of an Income Tax or Capital Gains Tax (IT/CGT) repayment as an asset, treat the repayment for interest purposes
- as being on deposit
- from the death
- normally, up to the date of calculation.
The IT/CGT repayment is treated in this way because HMRC had the benefit of that money. However, see the further instructions about repayment supplement (IHTM31516) included in the IT/CGT repayment.
First calculation
When calculating tax on a repayment of IT/CGT when it is first disclosed to us after the grant, you should charge interest:
- on the tax due
- but, only in so far as it exceeds the amount of IT/CGT repayment.
Example
Tax is due 30 June 2012.
The taxpayer tells us about further assets that give rise to £2,500 additional tax. These include an IT repayment of £500.
You issue a calculation on 9 October 2012.
You should charge interest from 1 July 2012 to 9 October on £2,000 only.
Amendments to repayment figure
You should apply the same rule when assessing tax on an increase in IT/CGT repayment. Treat the full amount of the repayment as remaining on deposit up to the time of the corrective calculation.
Example
Tax is due 30 June 2012.
The IHT400 includes an Income Tax repayment of £200. No interest was due on delivery of the account.
The taxpayer tells you about amendments that give rise to £4,000 additional tax. These include an increase in the Income Tax repayment of £200, to £400.
A calculation is issued on 9 October 2012.
You should charge interest from 1 July 2012 to 9 October 2012 on £3,600 only.
IT/CGT liabilities
You should ignore any tax liability deductible against the estate when making the adjustment, unless you know at the time you are preparing the calculation that the liability has in fact been set off against the tax repayment.