Inheritance Tax Confusion

Skiff85

My Grandfather recently passed away and and his estate is currently going through probate. In his will he left everything to my mum and her sister, the problem is for some reason, they have decided to use some guy they found on facebook to sort it out.

Anyway, this guy sent them the following message, which we feel is a con to get more money from my mum for very little extra work:

Thanks for your email and attachments.

I've reviewed the paperwork this morning and need to flag up an issue.
As the value of the estate exceeds £325,000 HMRC require the completion of a full inheritance tax account (IHT400). No tax will be payable however as we can apply to HMRC to Utilise the residential nil rate band allowance, thus saving approx £10,600 inheritance tax that would otherwise be payable.

As such this falls outside of the criteria of my Assisted Service Fee of £495, which is limited to completing the shorter 'return of estate information form' IHT205.

Completing the IHT400 is a time-consuming task due to the length and complexity of the form. I can still offer you the service but for an increased fee of £1,495 + VAT.

Please confirm you would still like me to proceed and I'll confirm the next steps.



This feels like a con to me though I have no idea about this stuff, but adding an extra £1000 for filling out a 16 page form seems a bit excessive.

I saw here in an article on the MSE website that says in the 2019/20 tax year, everyone is allowed to leave an estate valued at up to £325,000 plus the new 'main residence' band of £150,000 giving a total allowance of £475,000 per person.
So my Grandfathers house is worth £280,000 and he had £120,000 in his accounts, so in total it was less that the £475,000 threshold.

So is this guy literally just charging that much to fill out a form that we can fill out ourselves?

MovingForwards

The forms can be filled out by yourself, your mom or aunt. But as executors your mom/aunt need to sign the bit at the end to say it's the truth.

If in doubt get them to see a solicitor not a random person off Facebook (but you know that bit), be thankful it came to light now.

Rodders53

Yes.
Same as he's charging to fill out the other form that could be filled out by the executrixes themselves.

kazwookie

Are your mother / Aunt / your self able to fill out the paper work? if so tell the guy of FB no you do not wish him to carry on.


If they are not able to fill in the paper work, get them to a local solicitor who deal in this type of thing.


The bloke off Fb could be / or is scamming them

xylophone

On the face of it, this looks like a very simple estate - one property willed to direct descendants and £120,000 in savings.

Did your grandfather also have your grandmother's nil rate bands to transfer?

It seems probable that your mother and aunt could deal with the estate
themselves.

https://www.litrg.org.uk/tax-guides/bereavement/what-nil-rate-band

HHarry

You're right you've got £475k to play with so no tax to pay.

I don't think you can claim the residence nil rate band on IHT205, it is a case of completing IHT400, IHT435 (residence nil rate), IHT405 (property) and IHT406 (bank accounts).

The forms are all available online so have a look and see what you think. When my Mum died I was in no mood to try and fill out the forms and got some help, but a couple of months later I could have quite happily done it.

Keep_pedalling

What he is saying is not a con, there is more work involved when you have to fill in IHT400 and the associated supplements than there just filling in IHT205.

Hopefully they have only engaged him to complete the forms and they are not trusting someone off Facebook to handle any of the assets.

Owain_Moneysaver

Keep_pedalling wrote: »

What he is saying is not a con, there is more work involved when you have to fill in IHT400 and the associated supplements than there just filling in IHT205.

But not really much extra work, as the basic information is the same (there's one difference, I think it's unit trusts and similar, which goes under Cash and Bank on IHT205 and under Investments on IHT400 and supplement) and if the only reason for using IHT400 is transfer of residential nil-rate band all the complicated supplements (for tax deductable Peruvian forestry etc) can be ignored.

Also if Grandmother died first her nil-rate band may be transferable and so IHT205 and form IHT217 can be used for a tax-free estate up to £650k.

Skiff85

xylophone wrote: »

Did your grandfather also have your grandmother's nil rate bands to transfer?

He was single, divorced years ago so I guess this is not applicable.

xylophone wrote: »

On the face of it, this looks like a very simple estate - one property willed to direct descendants and £120,000 in savings.

Did your grandfather also have your grandmother's nil rate bands to transfer?

It seems probable that your mother and aunt could deal with the estate
themselves.

This is what I'm hoping to convince them of. If they had chosen to use a solicitor we probably wouldn't be too bothered but some random guy that advertises on facebook does not seem like the sort of person I would want to have dealing with something like this.

Keep_pedalling

Skiff85 wrote: »

He was single, divorced years ago so I guess this is not applicable.



This is what I'm hoping to convince them of. If they had chosen to use a solicitor we probably wouldn't be too bothered but some random guy that advertises on facebook does not seem like the sort of person I would want to have dealing with something like this.

I think you would be bothered by the solicitors fees, which are likely to be in 5 figures.

Cardew

Keep_pedalling wrote: »

I think you would be bothered by the solicitors fees, which are likely to be in 5 figures.

'5 figures' for a simple estate?

I would have thought a couple of thousand pounds.