This is (I hope) a simple query.
I'm the executor for my father, who died last month. There's a will, it's nice and simple, and I've got valuations for all his assets. It turns out that the estate value is just above the IHT threshold but because the house is being left to his children that takes it back below the IHT threshold, and no IHT is payable.
I initially applied for probate using the online system, but when I put in the figures it told me the estate was too big, so I couldn't do it online and I'd have to complete the IHT400.
I've spent the last few days doing that. I've got that, plus the 7 schedules that were needed. Just about to finish when it suddenly sprang the IHT 421 form on me. OK, I'll do that too. So, I naively thought, I'll do the probate form too. However, it seems to ask for a whole other bunch of stuff. It seems there's one system for those estates under the threshold; another for those where IHT is payable, but a big gap for those where the residence nil rate band takes it under.
Can anybody tell me the next steps? I'm just about to post off the IHT400 and all its accompaniments.
I believe if you want to claim the RNRB you're automatically in the territory of filing an IHT400 (the larger IHT return) with HMRC rather than the shorter direct system where you only deal with the probate registry.
I'm afraid I've only done this through solicitors, but the process is broadly - file IHT 400 - wait for HMRC to issue IHT421, ideally direct to your chosen probate registry (usually some chasing required at the moment) - complete probate application - wait for probate registry to join up probate registry and IHT 421 - grant issued.
Getting grants issued is taking a long time in lots of cases at the moment due to COVID and cutbacks, and making a mistake on the application can lead to you going to the back of the queue if you're unlucky, so take your time to get it right.
As I say, have only done it through solicitors so the personal application route might be slightly different, but not wildly. The process is set out on gov.uk I think.
Hope that helps
Why does the house being left to children remove IHT liability? I am pretty sure it is only to spouses that this happens? Certainly when my mum died me and my sisters were sole beneficiaries and IHT was very much due on the estate accordingly.
Can anybody tell me the next steps? I’m just about to post off the IHT400 and all its accompaniments.
Check the IHT205 journey first - https://www.gov.uk/government/publications/inheritance-tax-return-of-estate-information-iht205-2011
That's an online application process which will spit you out and point you to 400 if you need to go down that route.
The 400 journey is tortuous for the executor and the poor sods having to process them within HMRC. It is due to be replaced with a digital journey, but higher COVID and EU Exit priorities mean that it's not likely to happen soon.
Good luck with it!
Why does the house being left to children remove IHT liability? I am pretty sure it is only to spouses that this happens?
There's a 'main residence' nil rate band (pretty new thing, I think), which allows a certain amount of property value above the 325,000 threshold to be passed to direct descendants free of IHT.
IIRC, it basically means that a parent leaving up to a 500,000 home to children would not pay any IHT.
There is additional allowance added to the limit if the deceased is a home owner. Double if there was a spouse. Also add the spouses regular allowance. Total max allowance is approaching £1m if calculated right. There is no "bringing it under". Just additional limit.
Pretty sure normal iht threshold has been raised to 375k. Could be wrong. Also the extra residence allowance is 150k. These are both per main resident for a married couple. So 325x2 (or 375x2?) + 150x2 = 950k
@martinhutch - missed that coming in for some reason. Thanks for the explanation 🙂
I'm sorry for your loss, Big John. My mother died in October, so I've just been through this exact process with her estate, and came up against the same issues.
Once you've printed off the forms, check them VERY CAREFULLY. I found some very bizarre errors appeared in the paper copies.
But the good news is, the process was very quick. HMRC did their stuff in less than two weeks, and probate took 17 days from receipt of the form on January 4.
The residence nil rate band thing came in in 2017 and was a tortuous way to reach a Tory manifesto pledge in 2015 (the reasons for which stretch back to when Tony Blair resigned) that no estate of less than a million pounds will need to pay inheritance tax. This led to the readers of the Daily Mail and The Express rejoicing that the Tory's had abolished Inheritance Tax for the ordinary man in the street. The reality is somewhat different and the £1 million threshold is dependant on a lot of things. But essentially if you are married or widowed and leave everything to your children and the family home is over £350,000 you can pass an estate of less than a million without inheritance tax.
The problem is that these allowances have to be claimed and they are not there as of right, so to claim the residence nil rate band you have to go down the road of completing the IHT 400, and all the schedules. You also need to complete a PA1P probate application form.
So to answer the OP's question, The PA1P is sent to the Harlow Probate Registry (address is on the form) who now deal with all personal applications. IHT 400 plus schedules plus IHT 421 go to HMRC.
HMRC will then stamp the 421 and forward it to Harlow who will produce the grant.
@Esme I have to say your experience is not typical most people are waiting several months to get an issued grant. We have applications from October and November that haven't issued. That said we occasionally get lucky and one comes through quickly. Sadly there is no Rhyme nor Reason to it, just the luck of the draw.
Was about to say, Mine took about 4 months, came thorugh early January.
Sorry for your loss, I lost my dad early January. So I'm going through a similar thing. Except my dads estate is worth about 5k, but has about 8k in debts to HMRC and a dodgy claim from Preston Council for council tax (absolute shower of ****). I have already paid out for the cremation and final services bills (about £1500) out my own pocket. The issue is now, should I get probate involved to sort out who gets the cash because there is not enough for all claims. If I do get probate involved, dose this cost come out of the estate first before it all goes to creditors? And can I take out the expenses I've incurred form the estate, or do the creditors get the first claim? If anybody can shed some light on this it would be greatly appreciated . Sorry for the slight thread highjack
Thanks everybody for the advice. I've found that, yes, I had to do the IHT400 with about 7 schedules to calculate there is no Inheritance Tax to pay. But having done that, the Probate itself was able to be done online. And I've just got back from the post office after sending the forms and documents. As Bridget Jones said "we're going to need a bigger envelope".
The biggest surprise was the webchat I did with the probate service. They responded in seconds and pointed me in the right direction.
The issue is now, should I get probate involved to sort out who gets the cash because there is not enough for all claims. If I do get probate involved, dose this cost come out of the estate first before it all goes to creditors?
Same condolences to all of you, lost my mother in November and Dad year before
craig, as I understand it you can pay funeral expense from the estate prior to probate and add them to the deductions on the online probate form. This will also ask you for other creditors but my understanding is the funeral expenses are sunk costs (IANAL).
Wish you luck with it, lost my dad back in October and with everything going to my mum we scraped through without needing anything bar estimates and probate was done in under 10 mins.
His parents though took from 2012 and 2017 to now to sort though, I've just got their residual estate paid today.
Just wondering if anyone has successfully gone down the IHT205/ IHT217 route as suggested above by oldtennisshoes?
Having done all the IHT400 and all it’s necessary schedules, the very useful chap on the Probate helpline suggested I just do the IHT205 and 217, along with the PA1P. This way, the threshold is increased to £650k (both parents now deceased). And all 3 forms get posted off to Harlow, along with the will etc, not separately like would happen with the IHT400 method.
Having filled out the 3 forms yesterday, although it took a good few hours and a bit of number crunching, I can’t work out how the co-op quoted me £7.5k for doing it?
I can’t work out how the co-op quoted me £7.5k for doing it?
A chunk of that will be insurance against claims for lost inheritance if they make a mistake.
