Probate Application Code and Inheritance Tax Reporting Changes

HMRC published an update yesterday that changes the way HMCTS Probate is notified of no inheritances taxes (IHT) due or inheritance taxes paid in full for full IHT 400 estates in England and Wales only.

There are three routes for reporting estate accounts and IHT due to HMRC:

• Excepted Estates – simple online report for probate where the estate value is below the current Inheritance Tax threshold, the estate is worth £650,000 or less and any unused threshold is being transferred from a spouse or civil partner who died first.
• IHT 200 – A simpler IHT account return where someone dies, the excepted estate rules do not apply, and it is expected that inheritance tax will be due.  From 5 November 2007, an IHT reference number must be obtained before submitting IHT 200.
• IHT 400 – Full IHT estate accounts.  For larger estates or estates where assets were placed in trust, life insurance was paid out to someone other than a spouse/civil partner, there were two or more trusts, annuities were in payment, an estate worth £1m+ and many more reasons.

Changes from 17 January 2023 to IHT 400 and Probate

HMRC has issued an update that when completing an IHT 400 full accounts estate, you will no longer also be required to complete an “IHT 421” form this is a Probate Summary form that is sent to HMRC with the IHT 400 and other required IHT forms.  HMRC then send this on to HMCTS Probate when HMRC is satisfied that the IHT 400 submission has been completed and there is no tax to pay, tax has been paid or arrangements have been made to settle taxes in staged payments.

• HMRC will now send a letter confirming receipt of IHT 400 that includes a unique code with details of the estate values needed to make a probate application.
• The unique code will allow you to apply for probate using HMCTS Probate’s online portal.
• Application for Probate will not be granted without the new HMRC unique code.

Comment

Just last week we submitted IHT 400 for an estate before this update was issued.  That said, this new code approach will now mean:

• Just one less form sent as part of IHT 400.
• Stop premature probate applications before HMRC has finished its IHT vetting and calculation checks.
• Give individuals and advisers notice of when they can apply for probate rather than ‘jumping the gun’ and applying early creating backlogs and delays.