Relevant values for IHT purposes

[Bowlofcherries]

Hello! I’m presently trying to help someone with a probate application, and, unfortunately, I seem to have managed to thoroughly confuse myself, (and them!).

Does anyone know please if it is necessary to lodge inheritance tax forms with the Inland Revenue when the value of an estate is greater than £325,000, but comes to less than £500,000 when the value of the main residence left to the deceased’s child is included? The gross value of the estate is around £530,000, but when the deceased’s debts are deducted, the net value is around £484,500, including the house. I assume not, but the position is not absolutely clear to me.

My other query relates to the value of the main residence which is around £165,000. Am I right in thinking that the exempt value in this case would be £325,000 plus the actual value of £165,000, i.e., £490,000? Or would it be £325,000 plus the £175,000 main residence allowance?

Clarity on the above queries would be very much appreciated!

[Pezza54]

Please read Section 7 of PA1P Probate Application form.
An applicant needs to show how much IHT to pay using the IHT forms stated. If there is no IHT to pay this still needs to be shown on the appropriate form.
You were right first time. RNRB is £165k making a total £490k NRB

[sederunt]

In the circumstances stated, there might be no inheritance tax to pay if the net estate is under £490,000 but because the net estate is greater than the NRB of £325,000 and you need to claim the residential nil rate, then this is not an excepted estate. You need to submit form IHT 400 etc. to HMRC to claim the RNRB.

This all assumes that the deceased did not have transferable allowances from a predeceasing spouse ot civil partner.

[Pezza54]

Yes and IHT 435 to claim the RNRB

[Pezza54]

The 3rd sentence in my post above is incorrect. If the deceased died on or after 1 Jan 2022 and the estate is valued under £325k (or £650k if there is a full transferable allowance from a predeceased spouse or civil partner) then this is an excepted estate. IHT Form 205 is not now required and only calculated figures are required on PA!P Section 7
HMRC have saved themselves a lot of work checking forms.

[Bowlofcherries]

The 3rd sentence in my post above is incorrect. If the deceased died on or after 1 Jan 2022 and the estate is valued under £325k (or £650k if there is a full transferable allowance from a predeceased spouse or civil partner) then this is an excepted estate. IHT Form 205 is not now required and only calculated figures are required on PA!P Section 7
HMRC have saved themselves a lot of work checking forms.

Thank you for your reply.

However, would you mind clarifying the position for me please, (as you understand it)?

The executor duly submitted PA1P online, but said that there was nowhere to complete the information about the value of the main residence. I have to admit that this seemed a little odd to me.

Unfortunately, three months later, the Probate Registry comes back as follows:

‘Gross estate over £325,000 (IHT205)
The IHT figures you have submitted are above the excepted estate limit (i.e. exceed £325,000). To enable your application to proceed, please email us to confirm any charity / spouse exemptions. If no exemption applies, unfortunately you cannot complete an IHT205. Please complete an IHT400 / IHT421 and any supplementary forms and submit to HMRC’.

Do you have any idea why the probate registry is referring to IHT205 – I thought that this form was no longer in use?

It looks as if, even though there should be no inheritance tax to pay, the whole gamut of forms needs to be completed and submitted.

Is this your understanding of the position? Have I misunderstood your responses above?

[sederunt]

The need to submit form IHT 400 etc was explained above in post #3.


Form IHT 205 is only used for deaths pre 2022 and only for excepted estates.

[Pezza54]

Forms IHT 435 is used to claim RNRB and IHT 436 to claim any transferable RNRB

[Bowlofcherries]

The need to submit form IHT 400 etc was explained above in post #3.


Form IHT 205 is only used for deaths pre 2022 and only for excepted estates.

You did say that, yes, but, unfortunately, I was thrown by the subsequent reference to PA1P: ‘IHT Form 205 is not now required and only calculated figures are required on PA!P Section 7. HMRC have saved themselves a lot of work checking forms.’

Presumably, the above statements do not apply here because the house has been left to the daughter as opposed to a partner?

What I don’t understand is why the Probate Registry has replied that the executor cannot complete IHT205, given that this is not a form he has ever attempted to submit.

So, to be absolutely clear, there are no shortcuts for this estate and the deceased’s investments will have to be individually itemised on a paper application, rather than submitted online?

Many thanks.