Forms IHT301 and IHT 302

Dougdee

I posted a while ago about the time it might take to get a 'Final Assessment' to find out the remaining amount of IHT plus interest in order to pay it and then distribute the estate.

As seems inevitable we have now received the answer but find that the confusion is now greater. 

Prior to the grant of probate we received a form IHT301 that stated the sum to pay as £25,456.80. We had previously asked to pay by installments over 10 years and since this number was close to but different from 10% of our estimate of the tax payable shown on the IHT400 calculation. We made the assumption that there was a subtle difference and paid it.

We believe that we are due the allowance of both my Mother and Father since, on his death, everything went to my Mother and there were no other bequests.

This version of IHT301, headed Land, controlling shareholdings unquoted shares businesses,shows a calculation that relates purely to the tax before relief that would be due on the house. It makes no reference to RNRB allowances for either of my Parents. It gives a total that appears to be approximately twice what we were expecting to pay in total. It says 'To Pay' and Unless you pay this sum promptly you may have to pay extra interest. 

We also have a second form, IHT302. That also gives rise to a total that it says is due. Overall the calculations are lacking in clarity.

In the left column there is a summary of values of the accounts, shares and inventory and the sales price of the house. This total is approx £40,000 higher than the estate value on the IHT400.

On the right column it takes the higher total estate value  noted and deducts NRB of £325,000 then calculates 40% of that. We think that is the source of the problem and that there should be additional NRB for my Father.

This is the 'tax chargeable at this title' and is a horribly large number. The number does not pass through to any other calculation

However, below that is 'Apportionment of tax at this title'. It calculates tax on the new account/inventory number , less what we paid already and plus interest at various rates up to 4.75%. Then there is the total to pay about £46,000. Again it says to Pay and wanrns that additional interest will be charged if you don't pay promptly.

Finally ,the question I need to ask is

Am I expected in principle to pay both of these totals? Or am I misunderstanding how this all is supposed to work. Is the statemnt normally rendered in a manner so unclear.

I believe they are mistaken and have not taken into consideration the additional NRB due for my Father

I plan to call the helpline on Monday. I hope they can adjust this.

Doug

Keep_pedalling

Can you just clarify the numbers involved on your mother’s estate. It seems very unusual for a widow who inherited her husbands estate to have an IHT liability when nearly all her estate comprises of just her home. Presumably you completed IHT 402, 435 and 436 alongside IHT400.

Dougdee

We certainly completed all those forms.

The total estate as stated on the IHT400 was £1,628,502.. The house was sold for £1,444,444..

We were expecting the IHT liability to be £251,400.80.

Doug

Keep_pedalling

Dougdee said:

We certainly completed all those forms.

The total estate as stated on the IHT400 was £1,628,502.. The house was sold for £1,444,444..

We were expecting the IHT liability to be £251,400.80.

Doug

Well your calculation looks correct, if but an additional £40k does not match missing either of the transferable NRBs so I think your only option is to go back to HMRC to query their calculation

Dougdee

Here is an update that may be of interest to others.

Today I phoned the HMRC Probate helpline to try to have them revisit the IHT calculation.

It started badly when the first call dropped after 10 mins.

I called again and had a better experience this time. I was on hold for half an hour but then got a a very friendly and helpful agent. I explained to her that the several of the numbers quoted on the forms differed substantially from the numbers in IHT400 that we sent them. She wanted to put me on hold and go and check the figures. I said fine but can you also check that the full RNRB and RNB allowances for both of my parents were applied. She went away and checked and when she came back she said that she found that the items I mentioned were indeed in error and also she found that only one set of RNRB and RNB had been applied. I suggested that the numbers usedf were transposition errors and she did not disagree. 

So she then said that although she was not able to tell me the definitive numbers she thought it likely that the final number would be close to what we had calculated on IHT400. She would send a letter immediately and the revised calculation would be available later.

I pointed out that the receipt of the letter on Saturday had given us a pretty unpleasant weekend and she apologised for that.

So the moral of the story is that they do make mistakes and you should check the validity of their statements.

Doug