LEEDS OFFICE 
Trading as Avery Walters Ellis Solicitors 
 
HARROGATE OFFICE 
Trading as Powell Eddison Solicitors 
 
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The Position for deaths pre-1st January 2022 
 
When an individual passes away, certain forms may need to be submitted to the HMRC or probate registry. If the deceased’s estate falls into one of the ‘excepted estate’ rules then this will be the IHT205 form. 
An excepted estate can be categorised as follows: 
 
• Low value estates 
-These are estates where the gross value does not exceed the current available nil rate band of £325,000 (or £650,000 if their spouse predeceased them and left their whole estate to them) and no inheritance tax is due. 
- The deceased did not make any gifts with reservation of benefit, i.e., give an asset away legally but retain the interest for themselves. 
-The deceased did not make lifetime gifts exceeding £150,000 in the last 7 years before they died. 
-Assets held in trust by the deceased do not exceed £150,000 within a single trust. 
 
• Exempt estates 
- Estates where there is no inheritance tax due as the gross value of the estate does not exceed £1,000,000 and a spouse or charities benefit meaning then these exemptions are removed, the remaining estate is less than the available nil rate band of £325,000. If the allowance of the deceased person’s late spouse is being claimed then you will also need to complete the IHT217 form to transfer to unused nil rate band. 
- The above conditions regarding lifetime gifting and single trust also need to be satisfied. 
 
 
• Foreign domiciliaries 
- The deceased lived permanently outside of the UK and the value of their assets in the UK did not exceed £150,000. 
For more complex estates that do not meet the above criteria, an IHT400 form will be required and submitted to the HMRC and probate registry. These forms need to be submitted within 12 months of the end of the month of death and can make the administration of the estate more complex and costly. 
 
Changes for deaths after 1st January 2022 
From 1st January 2022 current thresholds have been raised meaning that more estates will fall under the category of ‘excepted estates’ and therefore it will mean less estates need to report to the HMRC and the probate registry with form IHT400, especially in cases where no inheritance tax is due. In addition to this, excepted estates will no longer be required to complete forms IHT 205 and 217. 
 
An excepted estate will now be categorised as follows: 
• Exempt estates – Estates where there is no inheritance tax due as the gross value of the estate does not exceed £3,000,000 and benefit from spouse/civil partner/charity exemption. This has increased by £2,000,000. 
 
• The deceased held only one trust and the assets of this trust did not exceed £250,000. This has increased by £100,000. 
 
• The deceased did not make lifetime gifts exceeding £250,000 in the last 7 years before they died. This has increased by £100,000. 
 
• The new rules remove the excepted estate status for ‘foreign domiciliary’. If a property was owned in the UK or lifetime gifts of UK assets were made in the last 7 years before death over £3,000 per year, the full IHT400 form will be required. 
 
How will this impact you 
Gov.uk estimates these changes are set to have a positive impact on an estimated 230,000 non-taxpaying excepted estates by simplifying the information to be provided to HMRC by their personal representatives and removing the need to send forms to HMRC. 
The changes to the monetary thresholds and other changes will mean personal representatives administering an estimated further 10,000 non-taxpaying IHT estates will not need to complete an inheritance tax form. 
These changes are expected to be welcomed by smaller estates as it is expected that these changes will reduce the reporting requirements for 90% of non-taxpaying estates requiring probate. 
 
Summary 
These changes may make it easier for personal representatives to deal with an estate removing the need for formal legal advice in many cases, saving time and money. This will no doubt be good news to many families in the UK suffering ongoing financial difficulties as a result of the pandemic, energy crisis and as a result of a bereavement. 

Probate Advice 

At Avery Walters our team of specialists can provide advice about Probate, Trusts, Wills, Lasting Powers of Attorney
 
Contact us on 0113 2007480 or email us at info@averywalters.com to arrange your free initial, no-obligation consultation with a specialist. 
Tagged as: Estate Values
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* Laura Stafford is the SFE accredited member 
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