Probate and inheritance tax

The Inheritance Tax nil rate band (the threshold below which no Inheritance Tax is payable - currently £325,000 per person) has been transferable between spouses and civil partners since October 2007. On current figures, therefore, a widow, widower or surviving civil partner may benefit from a nil rate band of up to £650,000.

However, the additional allowance is not automatically granted on the survivor’s death. A claim must be submitted to HMRC at that time, supported by documentation relating to the estate of the first spouse/civil partner to die.

An inability to produce the required documentation, following the survivor’s death, may not only lead to a substantial additional inheritance tax liability, but also an inevitable increase in costs.

While HMRC is adopting a fairly relaxed approach where the first death occurred before 9th October 2007, it has made it clear that it will not be so sympathetic, where the first death occurs after that date.

To minimise the risk of encountering difficulties when making a claim, it is therefore essential that relevant documentation relating to the first death is retained until the survivor’s death.

If you are responsible for administering even a straightforward estate, it is important to avoid potentially costly mistakes.

Obtaining legal advice from an appropriately qualified person should help to avoid pitfalls, save time and reduce stress.