Less Exceptions from Excepted Estates!
What’s an ‘excepted’ estate?
It’s where:
- there’s no inheritance tax due; and
- the estate complies with the excepted estate limits.
Usually, it’s more straight forward to get a Grant of Probate for excepted estates. Part of the reason is because a complicated inheritance tax form isn’t required.
When isn’t there inheritance tax to pay?
Common situations include:
- if you die before your spouse or civil partner and leave your estate to them (and they’re domiciled in the UK); or
- you leave your estate to charity; or
- the ‘chargeable’ estate is worth less than the available nil rate bands (although heed * below!).
The nil rate band is currently £325,000 although it might be worth less if you make certain lifetime gifts. If your estate doesn’t exceed the available nil rate band then there shouldn’t be any inheritance tax.
Your estate may also be entitled to an additional “Transferable Nil Rate Band”. That’s worth up to £325,000 and can be claimed from the estate of a deceased spouse in some circumstances.
What were the Excepted Estate limits before the changes?
Examples included (but were not limited to):
- your estate couldn’t be worth more than £1 million even if you left it to your spouse or a charity (so there wasn’t inheritance tax due);
- if the estate included multiple trusts or a single trust worth more than £150,000;
- if there were any ‘specified transfers’ (such as lifetime gifts) and their gross value exceeded £150,000; and
- only part of the Transferable Nil Rate Band was available.
Need more information? Please contact one of our experts in the private client department.
