The Inheritance Tax (Delivery of Accounts) (Excepted Estates) (Amendment) Regulations 2021

EXPLANATORY NOTE

(This note is not part of the Regulations)

The Regulations, which come into force on 1st January 2022, amend the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (S.I. 2004/2543) (“the principal Regulations”).

Regulation 2 amends the definition of “the prescribed period” applying to the principal Regulations to extend this to 60 days in England, Wales and Northern Ireland.

Regulation 3 amends regulation 4 of the principal Regulations, and the amendments fall into four main categories. The first amendment raises the value limits specified in the principal Regulations from £150,000 to £250,000. The second amendment concerns trust property, and introduces a limit on trust property of £1million, of which no more than £250,000 is property transferred on that person’s death other than by a spouse, civil partner or charity transfer. The third amendment adds a new requirement in relation to beneficial entitlement to property, and clarifies the position on chargeable transfers for non-UK domiciled estates. The fourth amendment is the introduction of new defined terms including “gross value of the estate for inheritance tax”, “net value of the estate for inheritance tax” and “net qualifying value of the estate”, and resulting consequential amendments.

Regulation 4 amends regulation 5A of the principal Regulations so that the multiplier to the nil rate band reflects that calculated under subsection 8A(4) of the Inheritance Tax Act 1984 (c. 51) (“the 1984 Act”).

Regulations 5 and 6 substitute a new regulation for regulation 6 of the principal Regulations and insert a new regulation 6A. New regulations 6 and 6A set out the information which should be produced to the Commissioners for Her Majesty’s Revenue and Customs in circumstances where a person is not required to produce an inheritance tax account to them under section 216 of the 1984 Act. New regulations 6 and 6A introduce different requirements for producing information to the Commissioners based on the domicile status of the deceased at the time of their death, which is determined by whether they meet the circumstances prescribed by regulation 4(2), 4(3) or 4(5) of the principal Regulations.

Regulation 7 provides a new heading for regulation 7 of the principal Regulations.

Regulation 8 amends regulation 7 of the principal Regulations. Paragraph (2) makes consequential changes to regulation 7(1) as a result of the new regulations 6 and 6A, and paragraph (3) extends the mandatory time period in which information is to be produced to the Commissioners of HMRC to within one month of the issue of the grant of probate or confirmation.

A Tax Information and Impact Note covering this instrument will be published on the website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.