simplified probate reporting

Changes introduced from the start of this year have simplified the process for obtaining a grant of probate (certificate of confirmation in Scotland) and limited the circumstances when a full inheritance tax (IHT) account needs to be delivered to HMRC.

Anyone acting as an executor for someone who has died on or after 1 January 2022 with an excepted estate is no longer required to submit a separate form IHT205 (C5 in Scotland). You can now report all relevant information on the probate/confirmation application.

Excepted estates

An excepted estate is one that does not require a full IHT account (using form IHT400). There are two main circumstances when an estate will be an excepted one:

Low value: This is an estate with a gross value of less than the IHT nil rate band of £325,000, or up to twice this threshold if the unused nil rate band of a predeceased spouse or civil partner is available. There are three value limits which also need to be met for an estate to qualify as low value, and two of these have been increased from 1 January:

  • The value of trust property included in the estate must not exceed £250,000 (increased from £150,000).
  • The value of foreign assets must not exceed £100,000 (no change).
  • The value of chargeable transfers made in the seven years before death (this is something of a simplification of the actual rules) must not exceed £250,000 (increased from £150,000).

Exempt: This is an estate with a net value – after deducting liabilities, exemptions and reliefs – that does not exceed the available nil rate band(s). The limit for the gross value (before the deductions) has been increased from £1 million to £3 million. The three low value estate limits also apply.

For example form IHT400 is not required for an estate of less than £3 million where everything in excess of the nil rate band(s) is left to either a spouse, a civil partner or to charity.

The value of any unused nil rate band is relevant in the definition of both types of excepted estate. Previously, if only a portion of a spouse’s/civil partner’s nil rate band was available, form IHT400 was still required. This is no longer the case.

The changes have reduced the burden on most non-tax paying estates which require probate or confirmation. With the removal of the IHT205/C5 obligation, more people may consider managing the estate administration process themselves.