Excepted estates - if the death was between 6 April 2004 and 31 August 2006
An 'excepted estate' is an estate where no Inheritance Tax is due. Although there are forms to complete, a full Inheritance Tax account
(form IHT400) isn't required.
On this page:
What qualifies as an excepted estate?
If the deceased person died between 6 April 2004 and 31 August 2006, the estate will generally be an excepted estate if one of the following
- it's a low value estate (see more in the section on low value estates below)
- it's an exempt estate - the deceased person left everything to a spouse or civil partner living in the UK or to a registered UK charity
(and the estate is valued at under £1 million)
- the deceased person was a 'foreign domiciliary' - they lived permanently abroad and died abroad and the value of their UK assets was under £100,000
This means you'll probably need to fill in form IHT205 Return of Estate Information (or form C5 in Scotland) as part of the probate process.
Find out about Inheritance Tax if the deceased person was domiciled abroad
What is a low value estate?
To qualify as a low value estate, the estate must meet all the following conditions:
- the value of the estate is less than the Inheritance Tax threshold for the year of death
- any assets that the deceased person benefited from that were held in trust, were in a single trust and the value was less than £100,000
- the value of any foreign assets was less than £75,000
- the value of any 'specified transfers' was less than £100,000 - see the section on specified transfers below
- the deceased person hadn't made any other gifts within seven years of their death that weren't 'specified transfers'
- the deceased person hadn't made any gifts that they continued to benefit from - these are known as 'gifts with reservation of benefit'
(see the section on gifts with reservation of benefit below)
- the deceased person had made the UK their permanent home - they were 'domiciled' in the UK when they died
Inheritance Tax thresholds
What is a specified transfer?
Specified transfers are gifts that the deceased person made during their lifetime that were either:
- cash, household and personal goods, quoted shares or securities
- straightforward gifts to an individual of land (but not gifts into trusts)
What is a 'gift with reservation of benefit'?
If the deceased made a gift to someone and still continued to benefit from it - such as a house they gave away but still continued to live in
- it is considered a gift with reservation of benefit, and counts as still being part of their estate for Inheritance Tax purposes.
Passing on your home to your children