Inheritance Tax – changes in reporting
Keeping up to date with tax changes is never easy and you may have missed this recent one in relation to Inheritance
Tax - changes in reporting (IHT), especially as it’s not something most of us have to become involved in very often.
Checking for an ‘excepted estate’
Inheritance Tax – changes in reporting came in at the start of this year, applying to the estate of anyone who dies on or after 1 January 2022. Now, before you make an IHT report to HM Revenue and Customs (HMRC) you need to check whether the estate is an ‘excepted estate’. This will ensure you complete the correct forms. These are reasons why an estate may be classified as one that is ‘excepted’:
– The estate has a value below the IHT threshold (currently £325,000 for one person)
– Any unused threshold is being transferred from a spouse or civil partner who died first, and the estate is worth £650,000 or less
– The estate is worth less than £3m and the deceased left everything in their estate to their surviving spouse or civil partner who lives in the UK, or to a qualifying registered UK charity
– The estate has UK assets worth less than £150,000 and the deceased had permanently been living outside of the UK when they died
Online guidance – step-by-step
Further details on Inheritance Tax – changes in reporting, how to value an estate for IHT and how to report can be found here www.gov.uk/valuing-estate-of-someone-who-died/check-type-of-estate
Make your own IHT plan
More people are having to pay IHT; HMRC figures show IHT receipts for the period April 2021 to January 2022 to be £5bn, which is a £700m increase on the sameperiod one year earlier. IHT planning is a complicated subject, but sensible financial planning can help to reduce the amount of IHT payable and help safeguard your wealth for the future.
6 HMRC, 2022