I have a case whereby I am completing an IHT205. The gross value of the estate exceeds the excepted estate limit. There is a lifetime mortgage secured on a property which means the net value of the estate is under the excepted estate limited. The IHT205 states that if Box K is under the excepted estate limit, which it is, I do not need to complete an IHT400. In the Declaration, it refers to Box H and Box H is not under the excepted estate limit so I cannot tick any of the boxes in the Declaration. What do I do? Any help would be appreciated.
It doesn’t quite say that; it refers to the position where the value in Box K “is above…”.
Even if Box K is below the excepted limit, Box H (Gross value for IHT) must satisfy the appropriate condition relevant to either “low value excepted estates” or “exempt excepted estates” [SI 2004/2543 as amended; latest amendment I believe made in SI 2014/488] which deal with the gross value of the estate. The former requiring an amount which doesn’t exceed the general NRB (or double that amount); the latter requiring that an amount greater than nil is transferred to a spouse or charity. These are the conditions to be satisfied and hence referred to in the Declaration.
You do not appear to have read the commencement of form IHT 205 which states:
When to use this form
Fill in this version of this form only when the person died on or after 6 April 2011. Fill in this form where the person who has died (‘the deceased’) was domiciled (had their permanent home) in the UK at the date of death and the gross value of the estate for Inheritance Tax is less than or equal to:
• the excepted estate limit
• twice the excepted estate limit and form IHT217 ‘Claim to transfer unused nil rate band for excepted estates’ is attached
• £1million and there is no Inheritance Tax to pay because of spouse, civil partner or charity exemption
…
Based on what you have said therefore you have to use IHT 400.
The note to Box K does not rule out an IHT400 when it is otherwise required, but rather provides a specific instance as to when you do (looking only at the net value).
If, as you indicate, the gross value is such that you can’t give any of the declarations on the back page, then unfortunately my reading is of this is that you need an IHT400.
Sounds as if you do need to complete a 400 as the gross estate is over the excepted estate limit. The current version of the 205 says that if box K is above the excepted estate limit, you need to file a 400, but it doesn’t say that if box K is below that figure then you can file a 205.
Thank you for taking the time to respond when, no doubt, you are all very busy. I have read the IHT205 many times but my confusion was because the IHT helpline, on a previous case with another firm, advised me that an IHT205 could be submitted in similar circumstances. If I could have found a way to submit an IHT205 for my client then I would have- no way was found!