HMRC urges agents to review excepted estates

HMRC is reminding tax agents to review inheritance tax (IHT) returns submitted for excepted estates following changes introduced from 1 January 2025. The warning follows concerns that some estates may have been incorrectly treated under the new rules. What should you check?

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The changes introduced from 1 January 2025 significantly widened the circumstances in which an estate can qualify as an excepted estate. As a result, many estates no longer require a full inheritance tax account to be submitted to HMRC.

Instead, personal representatives can provide the relevant information as part of the probate application. HMRC has now advised agents to review estates that have been administered under the revised rules to ensure they were correctly classified. An estate that is incorrectly treated as excepted could result in the wrong information being provided to HMRC or delays in the administration of the estate.

The reminder is particularly relevant where an estate includes overseas assets, lifetime transfers or more complex ownership arrangements, as these factors may affect whether the estate satisfies the conditions for excepted status. Agents should also ensure that the correct inheritance tax forms have been completed where an estate falls outside the simplified reporting regime. The expansion of the excepted estate rules has reduced the administrative burden for many families, but determining whether an estate qualifies still requires careful consideration of the underlying conditions. Reviewing files now may help identify any errors before they become more difficult to correct.

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