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Inheritance Tax reporting requirements relaxed

For deaths on and after 1 January 2022 there are relaxed reporting requirements for inheritance tax purposes. This should exempt many estates.

07 January 2022

For deaths on and after 1 January 2022 there are relaxed reporting requirements for inheritance tax (IHT) purposes, as previously announced in October 2021.

HM Revenue & Customs (HMRC) has changed the reporting limits for estates needing to provide a full IHT report on form IHT400.  

This should exempt many estates which can now use the more simple IHT205 declaration.

Personal representatives administering death estates in England and Wales, Scotland and Northern Ireland will benefit from the changes..

It will also have a positive impact on non-taxpaying excepted estates by simplifying the information to be provided to HMRC.

Changes from 1 January 2022

The changes include:

  • raising the threshold gross value of an excepted estate from £1 million to £3 million;

  • raising the value threshold of an excepted estate’s chargeable trust property from £150,000 to £250,000, although the total amount of trust property including exempt amounts is limited to £1 million;

  • increasing the value limit in relation to specified lifetime transfers from £150,000 to £250,000;

  • amending the definition of ‘IHT threshold’ 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 (the transferable nil-rate band);

  • simplifying the ‘alternative information’ that is to be produced for both small estates and exempt estates; and

  • removing excepted status from estates of foreign persons where the deceased either owned indirect interests in UK residential property or made lifetime gifts of UK assets above £3,000 in the seven years before death, unless the estate is not liable for IHT.

Probate fees

On 26 January 2022, probate application fees in England and Wales will increase to £273 for both professional and personal applications.

The impact of the increase was considered in a House of Commons Library report.

Currently, where an estate is valued at more than £5,000, the fee is £155 for a probate practitioner, or £215 for a personal application.

Back in 2018 the government had proposed a banded fee structure based on the size of estate, but this was seen as a form of taxation and later dropped. Instead, probate fees continue to reflect actual court costs.

Further information

If you would like to discuss inheritance tax planning or how we can help you with administering probate, please contact a member of our Estate Planning & Probate team.

You can also find more information on our Probate Services page.

Key contacts

Olivia Down

Tax Director

01392 448859

Email Olivia

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