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Our advice generally is that it is the same as any DIY; you need to have the time and the inclination, and the job hasn’t to be too difficult. We would always advise that professional advice is sought with regard to a taxable estate, at least to check the Inheritance tax return. Now an article in The Times suggests that families may be missing out on claiming tax allowances because the non-professional executor doesn’t know all the available exemptions.
With effect from deaths occurring after 6th April 2017, a new allowance, the “Residence Nil Rate Band” (“RNRB”) became available to set against the value of the family home if left to direct descendants, and where the estate as a whole is less than £2million. The RNRB started at £100,000 and this year has increased to £125,000. A married couple have two allowances, which can both be used on the second death. However, it has to be claimed within two years of death – HMRC do not award it automatically. The fact that Inheritance Tax revenues collected by HMRC have increased since April 2017 rather than fallen suggests this allowance is not being claimed as often as it could. In particular, lay executors may not know that they can claim an allowance for a spouse who died before 6th April 2017, or where the deceased has downsized since July 2015.
It may also be the case that lay executors don’t know that, if a property is sold at a loss within 4 years of death, then the sale value can be substituted for the probate value and the overpaid Inheritance tax reclaimed.
Not all solicitors know about the various tax reliefs that can be claimed and if you speak to someone who is not a specialist you may well come away thinking you could do the job yourself. However, any solicitor who is a member of the Law Society’s Private Client Section or a member of the Society of Trust and Estate Practitioners (“STEP”) will be able to review an Inheritance Tax return and advise if there are any additional reliefs to be claimed. Bearing in mind that an executor will have personal liability to the beneficiaries if they have paid too much tax, it could be money well spent.
If you are dealing with a taxable estate and you would like expert advice, please contact the Wills, Trusts & Probate team within our Private Client Department on 0161 941 4000 or email us firstname.lastname@example.org.