Probate and Administration - IHT400 and Excepted Estates (4) Flashcards
When does an IHT400 form have to be completed?
IHT400 (Excepted Estates): PRs must complete IHT400 (irrespective of seeking grant), unless the estate is excepted. Unless excepted, it is also a prerequisite of obtaining grant.
What is an IHT400 form?
IHT400: Non-excepted estates are subject to Form IHT400, which must be submitted to HMRC alongside any supporting schedules (IHT401 for non-domiciles).
(1) Contents: Inventory of deceased’s assets and liabilities, used to apply for IHT reliefs and exemptions.
Reference Number: Where IHT is due, PRs must apply for a reference number on Schedule IHT422.
(2) Filing: Filed at HMRC within 12 months of end of month of death, alongside IHT payment.
In Practice: As IHT is due alongside, usually filed within 6 months.
(3) Confirmation: HMRC will write to the PRs and provide a unique code and details of the estate values. The PRs must include the code and estate values in the relevant grant application form. Applicants should wait 20 working days after sending IHT400 to apply for grant.
What are the types of excepted estate?
Excepted Estates: Excepted estates are exempt from IHT400, but IHT may still be payable (IHT Regs 2004).
(1) IHT Information: IHT information is given directly to HMCTS when applying for grant (PA1P/PA1A).
Contents: Name and DoD of deceased.
Declaration: Declaration that estate is excepted, and notice of spousal death allowance used.
Estate Value: a) Gross Values of Estate/ST/SETs; b) Net Value of Estate/ST/SETs after debts; c) Net Qualifying Value of Estate/ST/SETs (after exemptions).
(2) Cleared Estate: HMCTS passes information to HMRC within one month. If HMRC does not request more information within 60 days of application for grant, no IHT is due.
(3) Updating HMRC: If a mistake is made, IHT400 must be submitted to HMRC within 6 months of discovery.
What is the small excepted estate?
Small Estate: Small estates are the first type of excepted estate.
Gross Value of Estate + Specified Transfers + Specified Exempt Transfers
IS LESS THAN
Nil Rate Threshold
AND
Specified Transfers + Specified Exempt Transfers
IS LESS THAN
£250,000
(1) Gross Value of Estate: Value of death estate before debts, exemptions, reliefs.
(2) Specified Transfers: Value of chargeable transfers in seven years before death (ignoring reliefs).
Exception: Excludes unquoted shares (meaning estate is not excepted).
(3) Specified Exempt Transfers: Value of typically-exempt transfers made in seven years before death (spousal; charitable; political; historic building funds; employee trusts; normal income expenditures above £3,000 in a year).
(4) Total Lifetime Value: The value of specified and specified exempt transfers cannot exceed £250,000.
(5) Nil Rate Threshold: £325,000 (subject to spousal death allowance).
What is the exempt estate?
Exempt Estate: Exempt estates are the second type of excepted estate.
Gross Value of Estate + Specified Transfers + Specified Exempt Transfers
IS LESS THAN
£3,000,000
AND
Net Chargeable Value of Estate + Specified Transfers + Specified Exempt Transfers
IS LESS THAN
Nil Rate Threshold
(1) Gross Value of Estate: As above.
(2) Specified Transfers: As above (no unquoted shares).
(3) Specified Exempt Transfers: As above.
(4) Total Lifetime Value: As above (cannot exceed £250,000).
(5) Net Chargeable Value of Estate, STs and SETs: Gross value after charitable and spousal exemptions.
(6) Nil Rate Threshold: As above.
What is the non-domiciled estate exemption?
Non-Domiciled Estate: Non-domiciled estates are those where the deceased was never domiciled, or treated as domiciled, in the United Kingdom (and only owned limited assets in the UK).
(1) Random Selection: HMRC will randomly sample non-domiciled estates within 60 days of grant application, typically for estates nearer to the IHT threshold.
