Less IHT Form Filling...for Most

As of 1 January 2022, the rules for inheritance tax [IHT] changed to make the procedures easier and to reduce administrative burdens.

The rule changes will reduce IHT reporting requirements for 90% of non-taxpaying estates.

For deaths up to and including 31 December 2021 it is still necessary to send full details of the estate’s value even if no tax is due, if amongst other things, the person who died:

• gave away over £150,000 in the seven years before they died;

• left an estate worth more than £1 million; and

• had inherited part of the inheritance tax threshold from a previous spouse or civil partner.

However, in addition to various other simplifications and clarifications of the rules, if the person died on or after 1 January 2022, the £150,000 and £1 million limits are increased to £250,000 and £3 million respectively.

The definition of inheritance tax threshold is also amended to include cases where some of the available threshold was used when the first of a married couple or civil partnership died and a claim is made for the unused percentage to be made available against the current estate.

These changes only apply in England, Wales and Northern Ireland. Scotland under wee Nicola always moves at her own pace (actually its due to the different legal systems before my countryfolk go blaming her!).

These are welcome changes and move IHT in line with changes we have seen for reporting small gains and small incomes.

For more information about the new rules and to use HMRC’s IHT checker tool (which is really simple to use), please see here.