Dealing with HMRC

Question 1

What must PRs do within 12 months of the decedent’s death concerning inheritance tax?

Answer 1

PRs must file an inheritance account with HMRC within 12 months of the decedent’s death unless the estate is excepted. Usually, PRs file the account sooner because interest on taxes owed starts accruing after 6 months, and a grant of probate or letters cannot be obtained until the tax is paid.

Question 2

How is co-owned land valued for inheritance tax purposes if the deceased was a co-owner?

Answer 2

The value of co-owned land is discounted to reflect the difficulty in selling it, except if the land is co-owned by a spouse, in which case no discount is given.

Question 3

What constitutes a small estate exempt from inheritance tax (IHT) for a UK domiciliary?

Answer 3

An estate not exceeding the IHT nil rate band (£325,000) is considered a small estate exempt from IHT, and no formal account is necessary. Additionally, no account is usually needed if the estate is worth less than £3 million and the net chargeable estate (after liabilities and any spouse or charity exemption) does not exceed the IHT nil rate band.

Question 4

What qualifies as an excepted estate for a non-UK domiciled deceased?

Answer 4

The estate is excepted if the UK estate consists solely of cash and/or quoted shares totaling no more than £150,000.