Excepted estates: what are the new Inheritance Tax reporting rules?

More estates will now fall within the scope of “excepted estates” legislation following changes to the rules this year, it has been confirmed.

It comes after amendments to the Inheritance Tax (Delivery of Accounts) (Excepted Estates) (Amendment) Regulations 2021 on 01 January 2022.

Under the changes, the threshold gross value of an excepted estate has been increased from £1 million to £3 million (with the total amount of property held in a single settlement being increased from £150,000 to £1 million in most cases), while the threshold of an excepted estate’s chargeable trust property has been increased from £150,000 to £250,000.

The limit on specified transfers in the seven years before death, meanwhile, has increased from £150,000 to £250,000.

It means that fewer estates will now be forced to submit full Inheritance Tax accounts as a condition of obtaining probate, significantly reducing the burdensome reporting requirements for non-taxpaying estates.

Estates that qualify for excepted estate status can use form IHT205, rather than form IHT400.

Commenting on the changes after they were announced last year, 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.”

The changes apply to any deaths which occurred on or after 01 January 2022.

At Moore Thompson we are able to explain, in no-nonsense terms, how tax issues might impact on your estate and help you sort out your financial affairs.

Our Partner, Heather Bright, who specialises in Inheritance Tax matters, will work on your behalf to ensure that your tax liability is minimised so that more of your hard-earned money stays with you, your business and, eventually, your loved ones.

Because we stay ahead of the curve, we will make sure that any changes to the tax regime are reflected in our advice to you.

To find out more, please get in touch with Heather.