HMRC changes Inheritance Tax regulations for excepted estates

The rules for probate reporting around non-tax paying estates are changing and for deaths occurring from 1 January 2022, executors will be exempt from having to submit a detailed return to obtain probate.

The changes now reduce the level of reporting required for  Excepted Estates as well as widening their definition and includes:

•  The gross threshold of excepted estates has changed rising from £1million to £3million.

•  The limit of specified lifetime transfers and trust property has increased from £150k to £250k.

•  Where some of the available IHT threshold has been used when the first of a married or civil partnership has died and a claim is being made for the second unused percentage to be used against the current estate.

•  The removal of excepted status from a foreign persons’ estate who owned interests in UK residential property or had made lifetime gifts of UK assets over £3k in the seven years prior to their death (excluding estates not liable for IHT).

•  An extension to the time period which HMRC has to ask for additional information to prove the estate is excepted increases
to 60 days.

•  The inclusion in the grant application of the gross and net values for IHT and the net qualifying value of the estate for IHT.

These changes will no doubt help to make the process of estate administration faster and more straight-forward.  It is still important that good record keeping of lifetime gifts and formal valuations of property, shares and high value personal chattels are kept for use on the death of the first spouse or civil partner which will help to make the probate process smoother on the second death.

If you would like help and support during probate or would like to discuss any issues around Wills and estate planning, please get in touch with our team today.

Alex Astley can be contacted at a.astley@gulllands.com