An ‘excepted estate’ is one where there is no Inheritance Tax due. In practice this means the value of the estate is below current inheritance tax threshold because the individual or combined spouse/civil partner Inheritance Tax allowance(s), or charity exemption, bring the estate below the inheritance tax nil rate band. These estates must also be less than £1,000,000 in value. There are 3 situations where an estate is regarded as an excepted estate. 1 The estate is of low value. Currently the Inheritance Tax allowance for an individual is £325,000. If value of the deceased’s estate is below this amount,… read more →
Valuing assets in the deceased’s estate is one of the most important jobs the executor or administrator has. It is the basis upon which an estate is assessed for IHT purposes. What assets should be included in any valuation? Everything, including property, land, cash in banks and building societies, shares, valuables for example jewellery, collections of art, coins & stamps and cars etc. All valuations are assessed on the date of passing. It’s worth noting that HMRC may challenge any valuations they disagree with so it’s important to provide a reference as to how they were arrived at. Valuing assets… read more →
A gift with reservation occurs when an individual makes a gift of an asset during their lifetime but continues to benefit from it. The most common example of a gift with reservation arises when someone gives their property away but continues to live in it. Spurred by the concern about the property being used to fund long term care it is often suggested that the family home is transferred into the names of the children. It should be pointed out that this is not always a good idea as what happens to the property now depends on the children’s circumstances.… read more →
The Residence Nil Rate Band is an additional inheritance tax allowance associated with estates that include a property or a share of a property. This additional tax allowance was implemented by HMRC back on the 6th of April of 2017 and allows for executors to potentially claim up to £100.000 which can be added on top of the current Nil Rate Band of £325.000. HMRC has announced that the Residence Nil Rate Band will gradually increase in increments of £25.000 with the passing of each financial year, reaching the maximum of £175.000 by 2020. This is designed to accommodate for… read more →
What is Inheritance tax? Inheritance tax (IHT) is a tax on the estate of a person who has passed away. A person’s estate is made up of various assets; these can include property, money and possessions. Inheritance tax is payable when an estates value exceeds their Nil Rate Band or Inheritance tax allowance. What is a Nil Rate Band? The Nil Rate Band (NRB) is the maximum amount up to which there is no inheritance tax payable on an Estate. Everyone has their own Nil Rate Band which is used upon their death. A person’s individual Nil Rate band allowance… read more →
What is inheritance Tax? Inheritance tax (IHT), sometimes referred to as Estate tax or Death duty tax, is a tax that is paid at a percentage rate on the value of a deceased’s person’s estate that is over their inheritance tax allowance. What is a Nil Rate Band? A Nil Rate Band (NRB) is the amount up to which there is no Inheritance Tax payable on a person’s Estate. The current Nil Rate Band is set at £325,000. This means estates that have a total value of less than £325,000 pass tax free. Estates where the total value is more than… read more →
The earliest form of what could be considered Inheritance tax was first recorded in 1694. “Probate Duty” was introduced in the Stamps Act 1694 as a way to help continue financing England’s involvement in the “Nine Years War” also known as “the War of the League of Augsburg” which had started in 1688. Probate Duty was charged at a fixed duty of 5 Shillings on an estate worth more than £20 and was applied for all personal estates where there was probate of wills or letters of administration. Probate duty remained the same for 86 years until 1780 when Lord North,… read more →
Probate forms explained Previously we have gone through the PA series of application forms you will need for probate. The PA1 form is the simplest in the process. The IHT forms is where it starts to get a little more complicated. This post goes through and explains the forms you will need when applying for a grant of probate for an estate where there is no inheritance tax to pay using the IHT 205. The first thing you need to do is establish which IHT forms you will need, there are a few factors that will determine this but the… read more →