Royal London is calling on HMRC to change inheritance tax (IHT) rules on larger estates to allow executors more time to pay complex tax bills.
Under current rules, the executor of a will can manage a person’s estate following their death by applying for a ‘grant of representation’ – otherwise known as probate.
The process involves valuing the estate, paying any outstanding debts or taxes and distributing the estate in accordance with the deceased’s wishes.
The deadline for IHT bills on an estate is six months after the person’s death.
However, research from Royal London states the majority of estates can take between six and 12 months to complete as larger properties or shares can be complicated and may need more time to be sold.
Helen Morrissey, personal finance specialist at Royal London, said:
“We are seeing more estates than ever subject to inheritance tax and larger estates can take a long time to wind up.
“Many executors may have no idea they could be responsible for finding the money for a large tax bill before money in the estate is available.”
Responsibilities
Other issues for the executor, such as lost paperwork or inaccurate record keeping, could cause further delays in paying tax bills on time so it is imperative to know your responsibilities.
Any outstanding taxes and debts must be reported and paid to HMRC. You will need your IHT reference number at least three weeks before completing your payment.
We can help with your estate planning. Contact Anthony Whittaker.
