Inheritance tax

Any Inheritance Tax due on the estate of the deceased must be calculated before the Grant of Representation can be issued.

Once the estate has been valued, it is the responsibility of the executor or personal representative to ensure that the correct Inheritance Tax form is completed and filed to HMRC, along with any necessary payment. You will need to prove that you have either paid any Inheritance Tax due, or that there is none to pay, before completing administration of the estate. We can assist you to ensure you pay no more tax then you absolutely have to.

In the UK, there is an individual Inheritance Tax-free allowance when someone dies. Assets valued up to £325,000 are free of tax. If the value of the estate is greater than this, the portion of it above this allowance is subject to Inheritance Tax at 40%. Do bear in mind that some items may be considered exempt from Inheritance Tax. Please ask us for more information about this.

Paying Inheritance Tax

Inheritance Tax on any assets of the deceased’s estate not held in trust is normally payable within 6 months of the date of death. The personal representative is responsible for paying the tax from the deceased’s estate. Because the tax must be paid before a Grant of Probate can be issued, and funds from the estate may not be freely available, sometimes the executor will need to pay the amount themselves, or borrow the money to do so. When this happens, that money will be reimbursed by the estate before it is distributed among the beneficiaries of the Will. We can advise you on the various options available to you in this regard.

There are certain types of asset, such as a house, agricultural land, or the net value of a business, for which payments can be paid in instalments over a 10-year period, or until the item is sold. Interest will be added to all instalment payments, however. You may have to pay at least 10% of the outstanding Inheritance Tax due on the value of property plus all of the Inheritance Tax due on non-property assets.

Once administration of the estate is underway, it is possible that additional Inheritance Tax will be levied. Executors should also be able to reclaim any previous overpayments. We can assist with this aspect as well if required.

Other taxes

Capital Gains Tax

Capital Gains Tax may be due to HMRC on any assets the deceased sold or disposed of prior to their death. It could also be levied on any assets subsequently sold by an heir. It’s up to the executor to establish the level of tax due. We can assist you with this.

Income Tax

An Income Tax return from 6th April to the date of death of the deceased will need to be completed and any tax due paid. The same applies to outstanding tax returns for previous years. We can assist you with this.