Tales from the Probate box – Two pronged approach to administering estates

George Hay Chartered Accountants were one of the first accountancy firms in the country to obtain a licence to carry out non-contentious probate work. In our monthly column, we give you an insight into the process and provide an update on what is happening in the world of probate and estates.

Earlier this month, we issued a blog about the changes in the reporting to the tax and probate authorities for deaths after 1st January 2022.

When we administer Estates, we find that the need for a two pronged approach is the aspect most commonly misunderstood by our clients.

The phrase “Getting Probate” means obtaining permission to administer an Estate, either as an Executor (by a Will) or as administrator (when no Will is left).

The Probate Office is a division of the Court and a “Grant of Probate”, which is the Certificate giving authority to act, is a Court document. Before the Court will grant the certificate, it needs to be sure that basic information is accounted for.

Where a Will is involved, the original has to be sent to the Probate Office (and will not be returned), who will check that it meets the requirement of the Will Act, including that it is signed and witnessed.

The Office also wants to be assured that the Estate’s tax affairs are in order. It therefore required the submission of one of two HM Revenue & Customs (HMRC) Inheritance Tax Forms, the IHT400 or the IHT205. These HMRC forms are just “tax returns” and, of course, HMRC is not part of the Court system.

The IHT205 was used for small Estates, primarily, where the assets were below the nil rate band (£325,000) and not subject to IHT, or if the Estate was valued under £1m and was left entirely to a spouse or charity, so would also be free of IHT.

The IHT205 could also be used if the double rate band from a previously deceased spouse was being claimed.

The IHT205 was sent to the Probate Office with the probate application form and the Probate Office would decide if they needed to send it on to HMRC for review.

For deaths after 1st January 2022, the IHT205 has been abolished and the aforementioned £1m limit has become £3m.

The IHT400 is used for all other cases. Annoyingly, this can include Estates where no IHT is payable.

Commonly, this would be because of a claim for Business Property Relief (some business assets are IHT free) or where an Estate wishes to claim the Residential Nil Rate Band (where somebody who has died leaves a private residence to a lineal descendant).

Any Estate where IHT is payable will always see a form IHT400 completed.

The procedure is that the IHT400 is first sent to HMRC. Within 4 weeks, HMRC will notify the Probate Office that they have provisionally reviewed the form; this is the point at which you can submit your probate application. However, that timescale only works if you have paid any IHT due. 

HMRC will not give authority to the Probate Office whilst IHT is outstanding unless there are assets (mainly land or property) where it is possible to pay the IHT by instalments.

When we are administering Estates, we always make sure we have diary notes of when we can submit forms and ensure we are always ready to move to the next stage e.g., to probate when the 4 weeks are up or to collecting in the assets as soon as possible once the Grant has been issued.

Whilst abolishment of the IHT205 form represents a simplification of the process of obtaining probate, accurate figures will still need to be compiled and reported to the relevant authorities and so, seeking professional advice can save you unnecessary worry and give you reassurance that nothing will be overlooked. Full details of our probate services are available here.

To discuss your requirements with one of our discreet, expert probate practitioners, contact Huntingdon-based Barry Jefferd on 01480 426500, or you can email us at probate@georgehay.co.uk where your enquiry will be dealt with by one of the team.

Authored by Director of GH Probate Ltd., Barry Jefferd.

Our Probate service is provided through GH Probate Limited. GH Probate is the trading style of GH Probate Limited. Registered in England and Wales number 9630102. Registered Office: St George’s House, George Street, Huntingdon, Cambridgeshire PE29 3GH.

Authorised to carry out the reserved legal activity of non-contentious probate in England and Wales by the Institute of Chartered Accountants in England & Wales

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    Barry Jefferd

    Tax Partner
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