HMRC has started sending agents an educational letter about the “excepted estate” shortcut for probate — the route that lets many non-taxpaying estates skip a full Inheritance Tax account (IHT400). The letters target applications filed at or near £325,000, £500,000, £650,000, £825,000 and £1 million, because HMRC has seen people wrongly factoring in the residence nil-rate band, or a transferable allowance, when deciding whether an estate qualifies as excepted. Those allowances aren’t automatic — the transferable nil-rate band and the downsizing allowance both have to be formally claimed on an IHT400. Get it wrong and you risk incorrect calculations, late claims, and unexpected tax or penalties once the mistake surfaces. HMRC has also moved the IHT reference number application (IHT422) online, requiring an email address, though paper is still accepted. Remember: an IHT400, where required, is due within 12 months of death, but interest starts six months after the end of the month of death.
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Six short reads each week on tax, Wills, family wealth and running a business, from John Ireland. Since 1996, three decades of protecting families.