Some grants are still taking eight weeks to be issued, with digital applications taking nearly 14 weeks on average when stopped. Paper applications are continuing to be a particular challenge for HMCTS (it recently admitted there is no reason for the long waits).
Meanwhile, the regulations for excepted estates were recently updated to simplify IHT-related bureaucracy. The changes are partly to assist practitioners and personal representatives in the initial work involved in applying for a grant.
Most applications are now made online and practitioners are reminded not to pre-date the submission date on IHT forms in an attempt to speed things up because a stop could be created.
You must also wait 20 working days minimum before submitting the probate application online where IHT is payable.
Unfortunately, a stop may be created through no fault of the submitting solicitors. For instance, in a recent case a scanning company removed the binding from a will before scanning the will. A stop was then created asking why the will had staple marks on it – resulting in needless delays. Incidentally, if HMRC does require further information, it now has 60 days instead of 35 days from the issue of the grant to request it.
To avoid any unnecessary delays, practitioners need to ensure they are familiar with the latest procedural updates that affect probate applications. To summarise, more estates will be excepted and fewer will require full inheritance tax accounts to be submitted. The latest changes include the following.
For estates where the net and gross estate values are nil, you no longer have to submit full IHT account IHT400 to HM Revenue and Customers when making a probate application (subject to specific exceptions).
Up to 90% of deceased estates where no inheritance tax is due will no longer be required to submit an inheritance tax account to HMRC, following changes to The Excepted Estates Regulations. The changes affect deaths from 1 January 2022 and widen the definition of excepted and exempt estates, and introduces new definitions of ‘gross’ and ‘net’ estates.
Gross Estate – The gross value is now the combined total of: the deceased estate; lifetime chargeable transfers; and exempt transfers (other than those covered by the annual exemption) made in the 7 years prior to death.
Net Estate – The updated regulations define the net value of the estate as the gross value less deductible liabilities.
Net Qualifying Value – This is the net value less anything transferred on death which is exempt under spousal or charity exemptions.
Excepted Low Value Estates – Estates in which the combined value of the gross estate and lifetime chargeable transfers (now up to £250,000) within the IHT threshold are now excepted (the IHT threshold can be increased by transfer of all or unused nil rate band);
Exempt Estates – Estates where the combined value of the gross estate and lifetimes transfers does not exceed £3m – and the value passing to non-exempt beneficiaries falls below the IHT threshold are now exempt.
Non-UK Domiciliaries – Where UK assets within the deceased estate are limited to cash/quoted shares of no more than £150,000.
The changes made by HMRC to the regulations follow criticisms leveled by the Office of Tax Simplification concerning the volume of cases where IHT accounts had to be submitted where no tax was payable. For many estates, the result will be a simpler and smoother process. Practitioners will also be hoping for a speedier turnaround of probate applications.
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