Personal representatives may soon be excused from submitting an IHT400 form where the estate's assets pass free of inheritance tax (IHT) under the transferable nil rate band rule. This lengthy form currently must be submitted in all cases other than when the gross taxable value of the estate (after deducting the spousal exemption or charity exemptions) is less than the IHT nil rate band threshold (currently £325,000).
It must also be filed when no tax is due as a result of the transferable nil rate band applying. Essentially, this would be on the second death of a married couple or civil partnership where the first to die did not use all of their nil rate band. This rule was introduced in late 2007 and is currently being used in 27,000 full estate returns each year.
HMRC now proposes to extend this exemption to some cases where the transferable nil rate band rule applies. HMRC estimates this will apply in three out of every four cases where transferable nil rate band is invoked. In all other more complex cases a full estate return will still have to be completed.
Not only will this save time and benefit probate practitioners, but it could lead to cost savings for clients and would be a most welcome change.
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