Inheritance Tax (IHT)
The IHT400 and IHT421 should be sent to HMRC before making the application for a Grant.
There is a deadline of 12 months from the end of the month of death.
Payment of IHT is due 6 months after the end of the month in which death occurs even if the returns have not been filed with HMRC.
The Grant of Probate requires an IHT status report. The Personal Representatives can not obtain the Grant of Probate until the IHT is paid.
There are a number of Tax Reliefs that apply to IHT:
- Nil Rate Band £325,000
- Residence Nil Rate Band - 2018/19 £125,000 2019/20 £150,000, 2020/21 £175,000
- Business Property Relief
- Agricultural Property Relief
- Woodlands Relief
The Will may require the creation of Trusts, these need to be registered with HMRC and may require Trust and Estate Tax Returns
Interest in Possession and Life Trusts
These trusts are becoming increasingly more popular.
A beneficiary who is entitled to the income of the trust for life is known as a 'life tenant' or as 'having a life interest'. A beneficiary who is entitled to the trust capital is known as the 'remainderman' or the 'capital beneficiary'.
The Trust will need to pay tax on the income and the capital gains via the Trust and Estates Tax Return.
It is possible for trustees to mandate the income to go directly to the beneficiary and not pass through the trustees, in which case the beneficiary will be taxed on the income.
Self Assessment Return to Date of Death (SA100)
Sometimes HMRC will deal with these on a informal basis otherwise a Self Assessment Return will be required.
Trusts and Estates Tax Return for Period of Administration (SA900)
A tax return may be required for the period of administration if gains and loss or income need to reported to HMRC.
Bicknell Business Advisers Limited
Bicknell Business Advisers Limited may be used as your Tax Agent to prepare and file the tax returns and register Trusts.