Inheritance Tax reporting for excepted estates

HM Courts & Tribunals Service (HMCTS) has recently changed the Inheritance Tax (IHT) reporting requirements for excepted estates. An estate is referred to as an ‘excepted estate’ when no IHT is payable.

The changes apply to all deaths on or after 1 January 2022. If the date of death is on or after this date, an estate is usually an excepted estate if any of the following apply:

  • Its value is below the Inheritance Tax threshold, which is currently £325,000
  • The estate is worth £650,000 or less and any unused threshold is being transferred from a spouse or civil partner who died first
  • The deceased left everything to a spouse or civil partner living in the UK or to a qualifying charity and the estate is worth less than £3 million (search the charity register for registered UK charities)
  • The deceased was living permanently outside the UK (a ‘foreign domiciliary’) when they died and the value of their UK assets is under £150,000

These changes are expected to reduce the number of submissions that require a completed IHT form to obtain a Grant of Representation.

To summarise, the changes should not be considered a major simplification of the process, as the work to obtain these figures is still mostly required, but it may not need to be submitted on an IHT form.

Kings Court Trust

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