Inheritance tax and probate rules set to change

At present, administrators and executors of estates are required to submit either an IHT400 or IHT205 form to make certain the appropriate procedures are taken, but the government has now confirmed that changes are planned for this process.

While the exact details of these changes are not fixed, it is expected updates will involve tightening tax collection administration instead of radical alterations to policy.

As of January next year, the legal requirement for inheritance tax paperwork to be completed will no longer be necessary for estates that have a value after probate that is well below the threshold – a change likely to affect 90% of estates.

Inheritance tax will need to be paid before probate (the Grant of Representation) is issued which can present challenges when the grant is required to encash assets.

Without access to any liquid assets available when someone dies to fund the IHT liability, options can be limited. In some cases, financial organisations will recognise this issue and release funds to HMRC directly to settle the tax prior to probate being issued.

Inheritance tax will need to be paid within six months of the end of the month when the person died. If it is not paid within this term, interest must be paid to HMRC. Also, HMRC must be notified of any death within 12 months of it occurring or, in addition to any interest due, a penalty may also be faced.

Those seeking financial advice in Shropshire who are confused by the complexities of inheritance tax can rely on experts in estate planning for guidance. Speak to us at Hartey Wealth Management for a clearer picture.

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