Inheritance Tax: Changes to Excepted Estates
New rules came into force on 1 January 2022 with the aim of simplifying the inheritance tax process by making it easier to administer excepted estates.
Excepted Estates are estates that do not require a full inheritance tax account form IHT400 to be filed with HMRC when applying for a grant of probate – instead, the information has in the past been filed using the shortened form IHT205.
From the start of this year, however, excepted estates no longer require a completed IHT205 form to apply for a grant of probate.
What Do The Changes Mean For You?
It means that if you’re administering an estate that qualifies as an excepted estate, you no longer need to file an Inland Revenue Account as part of your application for a grant of probate.
It is likely you’ll still need to apply for a grant of probate and you will still need to provide to the Probate Court the gross and net values of the estate.
Other changes to the excepted estates regulations include:
• Excepted estates now have a gross threshold value of £3million, up from £1million
• The threshold for lifetime gifts has been increased from £150,000 to £250,000
What Is An Excepted Estate?
An excepted estate is an estate that does not require a full inheritance tax account as no inheritance tax needs to be paid.
There are three types of excepted estates:
• Low value estates, usually below the nil rate band threshold for inheritance tax of £325,000
• Estates with a total value below £3million and no liability to inheritance tax due to a spouse or civil partner exemption or charity exemption
• Estates of those who died outside of the UK on or after 6 April 2022 and who never lived in the UK, and the value of the estate in the UK is below the nil rate band
Administering an Estate, The Right Way
Estate administration is a complicated business and if you are an executor or a personal representative for a deceased loved one’s estate, our specialist solicitors are here to help and advise you with the process.
The new excepted estates rules have helped to simplify the inheritance tax process, making it easier to administer an excepted estate as you no longer need to complete an IHT205 form as part of the application for a grant of probate.
We can help to clarify if the estate qualifies for excepted status and whether probate is required – not all estates need probate. With our guidance and legal support, you’ll be able to administer the estate effectively, efficiently and far more easily.
