Inheritance tax reporting reduced but not simplified

Traditionally, Inheritance Tax forms have to be filled out even when no Inheritance Tax is due – much to the surprise of those that have to fill the forms out! However, since 1 January 2021, this is no longer the case, following advisement by the Office of Tax Simplification.

The common sensical aim is that “over 90%” of non-taxpaying estates will no longer have to send Inheritance Tax forms to HMRC from the beginning of the year. However, while this vastly reduces the administrative burden on both taxpayer and collector, the process for determining whether or not individuals will fall inside or outside of that “over 90%” remains a complex one.

Personal representatives of estates where no Inheritance Tax is due are excepted from delivering full Inheritance Tax accounts when the estate in question is classed as an “excepted estate”. What is an “excepted estate”? The full answers are detailed in the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (SI 2004/2543) and the Inheritance Tax (Delivery of Accounts) (Excepted Estates) (Amendment) Regulations 2021.

While we won’t go into detail about these regulations here, suffice to say that there are three categories of “excepted estate” which are classed as low value estates (UK domiciles only), exempt estates (UK domiciles only) and non-UK domiciled estates.

If you are wondering whether or not you need to file an Inheritance Tax form, call JW Hinks on 0121 456 0190. Our professional and highly experienced tax team can help you figure out whether you have any reporting to do, and walk you through the process from start to finish if you do.