More estates now exempt from detailed IHT returns

The Inheritance Tax (Delivery of Accounts) (Excepted Estates) (Amendment) Regulations 2021 have been amended to implement previous suggestions made earlier in the year by HM Treasury’s Office for Tax Simplification to exempt more estates from the need to submit detailed estate returns as a condition of obtaining probate.

HMRC says that the introduction of the amendments will “significantly reduce” costs for many businesses, charities and voluntary bodies that administer estates, and stated that:

“Around 60% of the 240,000 estates a year affected by this measure (approximately 145,000 a year) are administered by probate practitioners and solicitors with ongoing savings.”

The following amendments have been incorporated and apply to deaths in England, Wales and Northern Ireland from 1 January 2022:

• Raising the threshold gross value of an excepted estate from £1 million to £3 million.
• Raising the value threshold of an excepted estate’s chargeable trust property from £150,000 to £250,000 (although the total amount of trust property including exempt amounts is limited to £1 million).
• Increasing the value limit in relation to specified lifetime transfers from £150,000 to £250,000.
• Amending the definition of “IHT threshold” to include cases where some of the available threshold was used when the first of a married couple or civil partnership died and a claim is made for the unused percentage to be made available against the current estate (the transferable nil-rate band).
• 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.

Further amendments include an extension of the period during which HMRC can request additional information from personal representatives to 60 days, as well as giving HM Courts and Tribunal Service a full month to transmit probate application information to HMRC.

The UK Parliament explanatory memo can be viewed here.

The UK Parliament regulations can be viewed here.