A New Inheritance Tax Tool from HMRC

HMRC have released a new tool ‘Check if you might need to pay Inheritance Tax’ to allow those dealing with deceased estates to work out the approximate value of the estate in order to help decide whether any inheritance tax is likely to be due or not.

It is not a calculator, so the tool can’t tell executors how much inheritance tax is due.

What the tool does is indicate whether or not executors need to pay inheritance tax and, if they do, helps them understand what to do next.

What it Doesn’t Do!

The tool does not calculate the potential inheritance tax liability or send any information about the estate to HMRC.

It also does not take account of any potential reliefs such as business property relief or agricultural property relief.  These reliefs will usually require specialist tax advice.

What it Does Do!

It can help to ascertain:

  • Whether or not any transferable nil rate band is available from a previously deceased spouse or civil partner.
  • Whether the residential nil rate band is available to the deceased, but not whether there is any transferable residential nil rate band available.
  • Whether any potentially exempt transfers were made in the seven years prior to death or any gifts with reservation of benefit which need to be brought into the death estate.
  • Any entitlement to assets through a life interest trust.
  • Any gifts to Charity.
  • Which debts of the deceased can be deducted from the death estate.

Once completed, the tool also provides some helpful guidance from HMRC. The guidance includes what to do next with regards to the inheritance tax forms that must be completed and applying for probate.

It is therefore an extremely useful tool for those dealing with deceased estates.  Have a look at the new tool here:

https://www.tax.service.gov.uk/guidance/check-inheritance-tax-due/property