INHERITANCE TAX: AN OVERVIEW-II
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How to do valuation of estate for Inheritance Tax?
There are three steps which should be followed while carrying out valuation. They are as follows:
1) Take the value of all of the assets that they own, together with the value of their share of any assets that they own jointly with someone else: for example a house that they own with their partner any assets which are held in a trust, from which they had the right to benefit any assets which they had given away, but in which they kept an interest: for instance, if someone gives a house to their children but still lives in it rent-free certain assets which they gave away within the last seven years
2) From the total above deduct everything that the deceased person owed, for example:
any outstanding mortgages or other loans unpaid bills funeral expenses. (If the debts exceed the value of the assets owned by the person who has died, the difference cannot be set against the value of trust property included in the estate.)
3) The value of all of the assets, less the deductible debts, is their estate. The threshold above which the value of estates is taxed at 40 per cent is £300,000 from April 2007. For the tax year 2008-2009 it rises to £312,000, in 2009-2010 to £325,000, and in 2010-2011 to £350,000.
Documentation for Inheritance Tax
Forms you need to fill:
1) If the estate is exempt from Inheritance Tax.
|
Country in which the deceased person lived |
Required forms for excepted estates |
|
England |
Form IHT205 and form PA1 – application for probate |
|
Scotland |
Form C1 (‘Inventory’) and form C5 if they died on or after 6 April 2004; if they died before this date form C1 only |
|
Northern Ireland |
Form IH205 only |
2) If the estate is likely to be subject to Inheritance Tax
In this case you complete form IHT200 plus any relevant supplementary forms (these are indicated on the IHT200).
You also complete:
Form D18 if the deceased person lived in England, Wales or Northern Ireland probate application form PA1 if the deceased lived in England or Wales Form C1 Inventory if the deceased lived in Scotland (In Northern Ireland you only complete a probate application form at interview.)
Deadline for paying Inheritance Tax
In most cases, Inheritance Tax must be paid within six months from the end of the month in which the death occurs, otherwise interest is charged on the amount owing. Tax on some assets, including land and buildings, can be deferred and paid in installments over 10 years.