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More estates to be made exempt from full inheritance tax accounts

More estates will be made exempt from the need to submit full inheritance tax accounts as a condition of obtaining probate, it has been revealed.

The move comes after the Office for Tax Simplification (OTS) published recommendations earlier this year on how the probate process could be streamlined.

According to the revised legislation, the Inheritance Tax (Delivery of Accounts) (Excepted Estates) (Amendment) Regulations 2021 have been amended to exempt even more estates from burdensome reporting requirements for deaths on and after 01 January 2022.

As part of the changes, the threshold gross value of an excepted estate has been increased from £1 million to £3 million, while the threshold of an excepted estate’s chargeable trust property has been increased from £150,000 to £250,000.

Other changes include:

  • Increasing the value limit concerning specified lifetime transfers from £150,000 to £250,000.
  • The definition of ‘IHT threshold’ has been revised to reflect the IHT nil rate band multiplier where less than 100 per cent of an unused IHT nil rate band is transferred to the deceased.
  • Simplifying the “alternative information” that is to be produced for both small estates and exempt estates.
  • Removing excepted status from estates of foreign persons where the deceased either owned indirect interests in UK residential property or made lifetime gifts of UK assets above £3,000 in the seven years before death, unless the estate is not liable for IHT.

Commenting on the measures, HM Revenue & Customs (HMRC) said: “The measure will reduce IHT reporting burdens for more than 90 per cent of non-taxpaying estates requiring probate or confirmation, and ensure that estates are not excepted from delivering IHT accounts where the deceased was never domiciled in the UK and IHT is due.”

The amendments also align the period in which HMRC may make enquiries into estates where accounts are not required at 60 days from the date of probate.

The full details of the changes can be found here.

For help and advice with related matters, please get in touch with our estate planning and probate team today.


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