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Changes To Inheritance Tax Reporting Requirements

A welcome relief to many ...

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Posted by Helen Beaumont on 15/12/2021 @ 8:00AM

For anyone who dies on or after the 1st of January 2022, Inheritance Tax reporting requirements are simplified for both low value and exempt estates. The Office for Tax Simplification made this recommendation and HMRC has adopted it ...

Simplification of Inheritance Tax reporting will be a welcome relief to many!

Simplification of Inheritance Tax reporting will be a welcome relief to many!

copyright: kzenon / 123rf

An IHT205 form is used for low value and exempt estates and an IHT400 for larger ones. The IHT400 is a long and tedious document and has to be submitted even when there is no tax due.

An estate is classed as low value when:

  • the gross value is less than the £325,000 nil-rate threshold

  • any assets held in trust don't exceed £150,000 in a single trust

  • specified transfers of gifts, shares, land or personal possessions do not exceed £150,000

  • the deceased made no gifts with reservation

Estates are classed as exempt when there is no Inheritance Tax due as the gross value doesn't exceed £1m and with exemptions for a spouse, civil partner or charity, the estate value stays within the nil rate band.

"Some thresholds are being extended!"

These changes mean that more estates will fall into the excepted estates threshold so the shorter IHT205 form can be used by executors. For a low-value estate, trust assets and specified transfers up to 7-years before death has been increased to £250,000 and for exempt estates, the gross value moves to £3m, with property in a single settlement increasing to £1m subject to certain conditions. The transfer limit is also increasing to £250,000.

In addition to the thresholds being extended, the requirement of the full transferable nil-rate band being available on second death will be removed. This means reporting requirements will be reduced for 90% of non-taxpaying estates.

"This will be a welcome relief to many!"

I strongly advise IHT forms are completed, especially where one partner in a marriage or civil partnership dies so you have this useful information available on the death of the second partner, maybe some years later.

Until next time ...



Would you like to know more?

If anything I've written in this blog post resonates with you and you'd like to discover more about these changes to Inheritance Tax reporting, it may be a great idea to give me a call on 01908 774323 and let's see how I can help you.

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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.