Chapter 10: Dealing with HMRC

Question 1

When must PRs file an inheritance account with HMRC?

Answer 1

Within 12 months of the deceased’s death unless the estate is small or excepted

Question 2

For what reason, will PRs usually file an inheritance account promptly?

Answer 2

Interest starts accruing on taxes owed after 6 months and a grant of probate or letters of administration cannot be obtained until tax has been paid

Question 3

What is a small estate?

Answer 3

An domicilliary which does not exceed the IHT nil rate band of £325,000

Question 4

Do PRs need to file an inheritance account with HMRC for small estates?

Answer 4

No, small estates are excepted. No formal account need be made unless requested by HMRC

Question 5

What is an exempt estate?

Answer 5

• The gross value of the estate does not exceed £3 million
• The spouse and/or charity exemption apply
• The remaining amount does not exceed the IHT NBR of £325,000

Question 6

Do PRs need to file an inheritance account with HMRC for exempt estates?

Answer 6

No, exempt estates are excepted. No formal account need be made unless requested by HMRC

Question 7

How can the inheritance tax threshold be increased?

Answer 7

By using some or all of a predeceased’s spouse’s unused nil rate band

Question 8

Is the estate of a non UK domiciled deceased excepted?

Answer 8

Yes, if their estate consists solely of cash and/or quoted shares which do not total more than £150,000