Inheritance Tax

Many people struggle to pay inheritance tax when there are not funds in the estate. HMRC has released new guidance.

HMRC has released comprehensive guidance regarding the process of applying for a grant on credit, as well as updates to tax regulations. This grant allows individuals to seek postponement of inheritance tax (IHT) payment when unable to raise funds before probate. HMRC’s guidance details the application process, following the Spring Budget 2024 announcement, eliminating the necessity for personal representatives of estates to seek commercial loans before applying for a grant on credit.

Before probate is granted, a portion or all of the IHT for a deceased individual’s estate must typically be settled. Should funds not be readily accessible from the estate, HMRC may grant a credit.

Their guidance outlines the application process, which involves submitting a completed form, confirming the inability to release funds, and specifying the amount of IHT to be paid. If approved, the applicant must commit to settling the IHT within an agreed timeframe, with interest accruing on any outstanding amount after the sixth month following the individual’s passing.

For detailed information, consult HMRC’s Inheritance Tax Manual from section IHTM 05120 onwards, elucidating circumstances under which HMRC may grant credit, including instances where personal representatives exhaust efforts to secure funds.

Additionally, HMRC has published the March 2024 edition of its trusts and estates newsletter, covering changes effective from April 2024. This includes adjustments to rules governing low-income trusts and estates, and guidance on basis period reform. For specific queries regarding overlap relief figures, trust or estate representatives are advised to contact HMRC’s trusts helpline.

For inquiries regarding the use of HMRC’s IHT helpline, please note it cannot offer guidance on certain matters, such as the inclusion of pension schemes or life insurance products in the estate, complex technical issues, or exemptions applicable before submitting form IHT400. Instead, taxpayers and their representatives are directed to HMRC’s IHT guidance and manual.

For further assistance and information on Inheritance Tax, contact us directly!