IHT Forms, Calculation & Payment
Once you have established which form you need to use and you have up to date statements or valuations you can fill them in based on information in your Master Physical File and Master Financial Summary.
If you are completing the full IHT400 remember you need to have accurate valuations of everything.
If you are completing IHT205 and the estate is borderline you need accurate valuations of everything.
If you are completing IHT205 and the estate is well below the Inheritance Tax threshold you can use estimates if they are realistic and can be backed up with paperwork in your file. HMRC can ask for information on any of your valuations.
Go through the form box by box using the information from your Master Physical File and Master Financial Summary.
IHT400 is due within 12 months from date of death.
CALCULATING AND PAYING IHT
This section is not applicable if you are completing IHT205 therefore you can ignore it.
There are many reliefs and exemptions available when working out how much, if any, Inheritance Tax is due.
You must refer to the IHT400 notes for information or contact us for advice.
The IHT400 Summary has details of how to complete a simple Inheritance Tax Calculation.
Broadly you get £325,000 tax free and then pay tax at 40% on anything over this figure.
IHT is due for payment six months after the end of the month of death. Some payments can be made in instalments.
WHERE DID THEY LIVE?
If the deceased lived or had assets abroad contact us for advice.
ASSETS EXEMPT FROM IHT
Assets that pass to a deceased’s spouse or civil partner who lives in the UK.
Assets that pass to a qualifying charity or other qualifying body.
EXECUTORS BANK ACCOUNT
HSBC Bank provide an Executors Account without requiring you to use their services for the Probate process.
If you cannot get an account due a poor credit rating etc, you can use the services of an ICAEW Probate Firm who will set up a client account on your behalf. You will need to engage the firm to provide some services but it does not have to be the entire process so you can keep fees to a minimum.
ICAEW Probate Firms client accounts are govered by strict clients’ money regulations.
If the estate is low in value or low in number of beneficiaries, you may be able to get asset holders to pay funds into a personal account in your name.
It is likely you will need to provide an indemnity (guarantee) to the asset holder signed by all beneficiaries.
ARRANGE FUNDS OR LOAN TO PAY IHT/PROBATE FEES
You must pay IHT due before probate is granted.
As a first step consider if there are enough funds in the deceased’s bank or building society accounts to cover any Inheritance Tax due. Most banks will make a payment direct to HMRC from funds held in the deceased’s account, prior to probate being granted.
Executors (where there is a will) have additional powers than Administrators (no will) in that they can sell assets before receiving probate, for example, a car, jewellery, personal items or quoted investments.
Sale of these items can be used to pay any Inheritance Tax due.
Administrators cannot sell any assets prior to receiving the grant of letters of administration.
The bank where you set up the Executor’s account may offer a loan to cover any Inheritance Tax due, particularly if it can be secured on a property.
TRANSFER OF NIL RATE BAND
To use another nil rate band from a pre-deceased spouse and you are completing IHT205 use
if you are completing IHT400 use
APPLY TO COMPLETE INHERITANCE TAX INFORMATION ONLINE - BETA (TEST) SERVICE
You can email HMRC to ask to use this service instead of using the paper form.
To get access, email HM Revenue and Customs (HMRC) at:
with your contact details. Make sure you include the email address you want a reply to.
You’ll be sent an email that will explain how to access the online service.
The IHT online service is a beta service and any feedback you give will help HMRC improve it.