Inheritance Tax deductions

maxoliver

Hi All,

I'm managing my recently deceased Mum's estate and sorting out the Inheritance Tax.

I have deducted the funeral costs from the estate value, and have looked at any other bills (she paid in advance so nothing else) so that we can remove those from the estate total value, but I'm wondering if I am missing something else?

For some reason I thought that the estate agent fees (for selling the house) could be deducted from the estate value along with solicitor fees etc - but I'm not finding anything about this on the HMRC website. Obviously I'm trying to ensure we pay only the right amount of inheritance tax, so need to ensure everything else is deducted so would really welcome any suggestions on what I might have missed or if you know if the costs of selling the house can also be estimated and excluded? The house isn't on the market yet and we are using an estimated value for working out the tax.

Cheers
Max

getmore4less

The value of the estate for IHT is as of date of death.


Most of what you need to know is in the notes that come with IHT205 and IHT400(set)

have you read through them all.... start here
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372051/iht206-2011.pdf

then you need to go to the HMRC IHT manual(loads of it).
eg.

http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm28081.htm

getmore4less

A search started with HMRC IHT keywords...

usualy find the relevent stuff on HMRC website and the pages link to each other so you can find a lot of information quite quickly.

G_M

I thought that the estate agent fees (for selling the house) could be deducted from the estate value along with solicitor fees etc

Sorry. You're wrong.

The tax is based on value of the property at date of death. Subsequent costs (if any - the Beneficiaries might choose to keep the property) must be borne by the Executers out of the Estate (if they sell) or the Beneficiaries (if they sell).

maxoliver

Thanks - I've searched through and read reams and reams of the HMRC guidance notes but always aware that some things aren't always clearly stated or can be buried in terminology that clouds the issue.

I'll go fill out some forms then.

getmore4less

Check/maximise transferable nil rate band if previous spouse

Don't overvalue the contents and personal stuff.

Review what will be kept and what will go to charity.

Toxteth_OGrady

maxoliver wrote: »

I have deducted the funeral costs from the estate value, and have looked at any other bills (she paid in advance so nothing else) so that we can remove those from the estate total value, but I'm wondering if I am missing something else?

For some reason I thought that the estate agent fees (for selling the house) could be deducted from the estate value along with solicitor fees etc - but I'm not finding anything about this on the HMRC website.

IHT400 Notes Page 51(pasted below):

You may deduct funeral costs and reasonable mourning expenses. You may also deduct the cost of a headstone or tombstone marking the site of the deceased’s grave. These expenses may also include a reasonable amount to cover the cost of:
• flowers
• refreshments provided for the mourners after the service
• necessary expenses incurred by the executor or administrator in arranging the funeral.

Other liabilities

Only include debts that the deceased actually owed at the date they died and which meet the conditions for a debt to be deducted. You must not include fees for professional services carried out after death unless the fees were incurred in obtaining a refund of Income Tax or Capital Gains Tax and the refund is shown as an asset of the estate in box 74. This means that probate fees, any solicitor’s or estate agent’s fees and any valuation fees incurred in dealing with the deceased’s estate cannot be deducted.