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Friday, 5 October 2023

Money, tax and benefits

Excepted estates - if the death was between 6 April 2023 and 5 April 2023

An 'excepted estate' is an estate where no Inheritance Tax is due. Although there are forms to complete, a full Inheritance Tax account (form IHT400) isn't required.

What qualifies as an excepted estate?

If the deceased person died between 6 April 2023 and 5 April 2002, the estate will generally be an excepted estate if it qualifies as a low value estate.

This means if you're a personal applicant you'll probably need to fill in form IHT205 Return of Estate Information (or form C5 in Scotland) as part of the probate process. If you're a solicitor you only need to swear the oath.

What is a low value estate?

To qualify as a low value estate, the estate must meet all the following conditions:

the value of the estate wasn't more than the excepted estate limit for the year of death (see the table below)
the value of any foreign assets wasn't more than the limit for the year of death (see the table below)
the value of any 'specified transfers' wasn't more than the limit for the year of death (see the table below)
the deceased person hadn't made any other gifts within seven years of their death that weren't specified transfers (see more in the section on specified transfers below)
the deceased person hadn't made any gifts that they continued to benefit from - these are known as 'gifts with reservation of benefit' - see more in the section on gifts with reservation of benefit below
the deceased person hadn't made any transfers into a trust during their lifetime
the deceased person did not benefit from any assets held in trust within seven years of their death
the deceased person had made the UK their permanent home - they were 'domiciled' in the UK when they died

Limits for low value estates

Deaths between	Excepted estate limit	Assets held outside of the UK limit	Specified transfers limit
6 April 2023 and 5 April 2023	£180,000	£30,000	£50,000
6 April 2023 and 5 April 2023	£200,000	£50,000	£75,000
6 April 2023 and 5 April 2023	£210,000	£50,000	£75,000

What is a specified transfer?

Specified transfers are gifts that the deceased person made during their lifetime which were gifts of cash, quoted stocks or shares.

What is a 'gift with reservation of benefit'?

If the deceased made a gift to someone and still continued to benefit from it - such as a house they gave away but still continued to live in - it is considered a gift with reservation of benefit, and counts as still being part of their estate for Inheritance Tax purposes.