Woollcombe Yonge   Looking to save on Inheritance Tax?
Woollcombe Yonge
Dave Smith

admin

Looking to save on Inheritance Tax?

Looking to save on inheritance tax?

We deal with a variety of probate matters here at Woollcombe Yonge, many of which would be liable for inheritance tax but for the current allowances in place. But did you know that there are time limits in place within which to claim, or you could potentially face a huge tax bill?

Currently in England, every person can gift away up to £325,000 upon death plus a further £175,000 where a home is gifted to children or grandchildren upon death – completely free of inheritance tax. Anything in excess of this is charged at a rate of 40%.

In addition to this, you can essentially double these figures for an estate of a surviving spouse where the first to die left their entire estate to the widow or widower. This could potentially allow an estate to inherit up to £1,000,000 worth of assets completely free of inheritance tax.

What some people do not realise however is that a claim for these additional allowances must be made within two years of the date of death.

This issue has arisen recently on one matter of ours in particular and involved an executor appointed under a Will to administer the estate of her late mother. Being extremely close to her mother having lived with her on her passing, our client suffered from a period of severe grief which caused her to be signed off work on sickness grounds.   This resulted in her being unable to administer her mother’s estate and did not instruct us until three years after death.

Being an estate which would have been tax free after claiming the available allowances, the executor now potentially faces a tax bill in the region of £150,000.

When claiming the above transferable allowances, personal representatives must bear in mind that claims of this nature must be made within two years of the date of death of the second to die. Failing that, a claim will need to be brought to HMRC to ask that they waive this two-year period based on exceptional grounds. HMRC are under no obligation to accept this however and consider each matter on a case by case basis.

If you require help with regards to ensuring you are taking the appropriate steps to administer an estate within a timely manner, or wish to discuss the above in further details, please contact us on 01752 660384 and ask to speak to a member in our Wills, Trusts & Probate team.

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