IHT 400

 In Tax, Wills

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HMRC are replacing the IHT200 with IHT400 with effect from 9 June 2009 but the new form is already available on the HMRC website. The basic concept of the IHT account is unchanged – it will continue to constitute a core form with various schedules.

The core form will be varied to include:

  • More information about the last known permanent address of the deceased – for example, if the deceased did not own or partly own the property an explanation of how they came to be living there will be required
  • A more specific question about powers of attorney and specifying on the form that a copy of any such power has to be supplied with the papers
  • The incorporation of the contents of the D1 Schedule into the core form
  • The section displaying the estate will have two columns to list the assets in the estate – column A for the non-instalment property and column B for the instalment option property

New pages will include:

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  • A new page for listing bank and building society accounts
  • A new page for notifying intention to claim conditional exemption for heritage assets
  • A new page to integrate the contents of form IHT216 so that claims for transfers of any unused NRB are included as part of the account

The way in which jointly owned assets are dealt with on the account has been completely revised. The replacement schedule clearly indicates on the front that where jointly owned assets consist for example of a bank account where all the monies were provided by one person, such as the deceased, then their share of the account will be 100% based on recent case law decisions. The schedule then distinguishes between houses, buildings and land, businesses and interests in businesses and shares & securities which gave the deceased control of the company on the one hand and other jointly held assets such as bank accounts and household goods on the other.

There has been a revision to how the calculation of tax is displayed with particular reference to lifetime gifts to make it clear that such gifts use up the Nil Rate Band first.

There will also be the need to answer more explicit questions concerning farming activities. For example:

  • Are there any outstanding planning consents on the property which have not been implemented?
  • Give a detailed description of the ‘day-to-day farming activities carried out on the land’ – i.e. it will not be sufficient to simply state ‘general farming’ or something similar
  • Give details of the extent of the deceased’s involvement in the activities described – i.e. was he physically doing the farm work or was he too old or had he outsourced the day-to-day activities to someone else?
  • In the case of farmhouses and cottages you will need to advise whether or not the property was empty at any time in the two years prior to the transfer or date of death and also explain who occupied the property and on what basis.

In other words, the schedule has been updated to deal with developments in case law.

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