If you’ve been appointed as an executor, one of the first questions you’ll need to answer is whether an inheritance tax (IHT) return needs to be submitted to HMRC.
This is an important step in the probate process. While some estates can follow a simplified route, others require a full IHT account to be completed. Getting this right can help avoid delays, additional costs and unnecessary stress at an already difficult time.
Do all estates need an IHT return?
No. Many estates qualify as an ‘excepted estate’, meaning a full IHT return does not need to be submitted to HMRC.
Whether an estate falls into this category will depend on a number of factors, including:
- The value of the estate
- The assets involved
- Who is inheriting the estate
- Whether any IHT exemptions or reliefs are available
While the rules have been simplified in recent years, establishing the correct reporting requirements is not always straightforward, particularly where larger estates or more complex assets are involved.
What is an excepted estate?
An excepted estate is one that does not require a full IHT account to be submitted to HMRC. Instead, key information about the estate is provided as part of the probate application.
Changes introduced in recent years have widened the scope of the excepted estate rules, meaning more estates can now benefit from this simplified process.
However, it is important not to assume that an estate automatically qualifies. Factors such as the value of the estate, gifts made during the deceased’s lifetime, trusts and the availability of reliefs can all affect the position. Taking the time to establish the correct reporting requirements from the outset can help avoid issues later in the probate process.
When is a full IHT return required?
Some estates require a more detailed IHT account to be submitted to HMRC.
This is more likely where the estate exceeds available allowances, includes trusts or business assets, or where reliefs need to be claimed. HMRC may also require additional information before probate can be granted.
As every estate is different, it is important to review the circumstances carefully before deciding which reporting requirements apply.
Why is it important to get this right?
Determining whether a full IHT return is required is an important part of administering an estate.
If the wrong information is submitted, or reporting requirements are overlooked, it can delay the probate process and lead to additional queries from HMRC. In some cases, interest may be charged on unpaid IHT, and penalties could apply if deadlines are missed.
For many executors, this is their first experience of dealing with probate and estate administration. Seeking advice at an early stage can help ensure the correct information is reported and avoid unnecessary complications later in the process.
How can professional advice help?
Administering an estate can be time-consuming, particularly when you’re also dealing with the practical and emotional impact of a bereavement.
Professional advice can help ensure the correct IHT reporting requirements are identified, available reliefs are claimed and probate applications are completed accurately and on time. Most importantly, it can provide reassurance that the estate is being administered correctly.
Need support with probate or IHT matters?
PM+M’s probate and estate administration specialists can support executors throughout the process, helping them navigate probate requirements and understand their IHT obligations.
If you would like to discuss your circumstances, please get in touch with our team.
