IHT reporting requirements to be eased

HMRC have released a policy paper extending the circumstances where information can be provided to HMRC in place of full Inheritance Tax (IHT) accounts. Certain definitions have also been clarified and time limits extended.

The revisions will apply to deaths in England, Wales and Northern Ireland from 1 January 2022 and are as follows:

• The monetary limits for the provision of information to HMRC in place of an IHT account for low value and exempt excepted estates are increased as follows:
  • The limit for the aggregate of Chargeable transfers and exempt ‘Normal out of income’ transfers made prior to death is increased from £150,000 to £250,000.
  • The limit for chargeable trust property is increased from £150,000 to £250,000.
• For exempt estates:
  • The gross value limit of the estate is increased from £1 million to £3 million with the total amount of trust property, including exempt transfers, being limited to £1 million.
• Estates of Non-UK domiciled individuals are not excepted estates if:
  • Chargeable gifts over £3,000 were made in the seven years prior to death.
  • It contains overseas property which has value attributable to UK residential property.
• The definition of the IHT threshold is amended to reflect the Nil-Rate Band (NRB) multiplier where unused NRB is transferred to the deceased. This allows certain estates where some of the NRB was used on the earlier death to qualify as an excepted estate.
• The information is now to be provided by the UK Court Services to HMRC within 30 days from the grant of probate or confirmation an increase from the previous seven days.
• HMRC may make enquiries into the estate up to 60 days from the grant of probate or confirmation.

Useful guides on this topic

IHT: Estate planning checklist
This checklist covers some of the essential planning points that taxpayers should know when planning for their estate and Inheritance Tax (IHT).

IHT (Inheritance Tax): allowances & rates
This is a freeview 'At a glance' guide to Inheritance Tax (IHT) rates and allowances.

IHT: Transferable Nil-Rate Band
What is the Transferable Nil-Rate Band? Who does it apply to? How do I claim it?

Non-domicile status, deemed domicile & tax
Who is non-UK domiciled? What does this mean for UK Income Tax, Capital Gains Tax and Inheritance Tax? What reliefs are available to non-doms?

IHT: Gifts
This is a freeview 'At a glance' guide to the IHT implications of making gifts.

Client Briefing: Making gifts & IHT
What gifts can you make without triggering Inheritance Tax (IHT)? What are the rules on making tax-effective gifts for IHT purposes?

IHT: Normal Expenditure Out of Income (gifts)
When is Normal Expenditure out of Income exempt for Inheritance Tax (IHT)? How do you claim the exemption?

External Links

Inheritance Tax: Reduced reporting requirements - policy paper