Do I Need to Fill in an Inheritance Tax Form?
If you are wondering if you have to fill in an inheritance tax form, then read this as we give you all of the information you need about IHT forms and procedures.
Inheritance tax forms a significant part of many estates, and it’s a tax on the estate of someone who has died, with the amount depending on the total value of their estate.
The figure is calculated based on the total value of their estate, which includes any properties they own, the money they have in savings and in the bank, any investments, any life insurance policies, and any physical assets such as jewellery.
Inheritance Tax (IHT) is paid at a rate of 40% of anything above £325,000, known as the ‘nil-rate band’.
HMRC Inheritance Tax Forms
However, there is no inheritance tax (IHT) to pay if:
- The total value of the estate is less than £325,000
- The deceased leaves anything over and above the £325,000 IHT threshold to their spouse, civil partner, or charity
The first thing you’ll need to do when dealing with the estate is to calculate the total value of the estate.
The threshold might be higher depending on your circumstances, such as if you’re married or in a civil partnership. That’s because if your spouse or civil partner dies, you’re exempt from paying inheritance tax if all their assets are left to you.
Your inheritance tax allowance will also increase by the percentage of their allowance that wasn’t used, which means that when you add the total value of the two £325,000 tax-free allowances AND the £175,000 main residence allowances, you can potentially have a £1 million tax-free allowance.
Of course, you’ll also have to deal with probate and that’s a crucial part of the IHT process. Probate applications have several key stages, starting with registering the death.
Inheritance Tax Forms UK
Inheritance must be paid by the end of the 6th month after the person’s death.
If it’s not paid by this point, HMRC will begin charging interest on the total amount of IHT owed. However, you can choose to pay tax on specific assets such as property via instalments and the remaining amount will still be subject to interest charges.
There are different ways in which you can pay IHT, including before probate, which is known as payment on account. Doing this can reduce the amount of interest charged on any IHT owed.
The good news is that if you pay the tax from your personal account then you’ll be able to claim it back from the estate once probate is granted.
If any IHT has been overpaid, HMRC will refund the amount once probate is granted too.
You can also arrange an instalment plan with HMRC to pay inheritance tax over a maximum of 10 years and this can be a useful way to ensure that significant sums are not forked out immediately from the estate.
If you’re planning on doing this, it’d be wise to speak to HMRC sooner rather than later to arrange a payment plan and work out what your costs will be and what’s needed to cover it from the estate.
There are several forms that relate to inheritance tax, including those for probate applications, filing and confirming IHT, and specific forms based on your circumstances. Properties will require forms to be filled out, any transfer of funds or assets will need forms to be filled out, and if any assets are held in a trust, this will also require a form to be filled out.
The good news is that at Solicitors Near Me, we’re here to help you connect with an Inheritance Tax Solicitor near you to assist with the completion of IHT forms, documentation, and the entire process of probate and dealing with inheritance tax…
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