Pixel

Excepted Estates and Small Estates

Gary Green
Gary Green
September 12, 2017

The amount inherited by a spouse or civil partner is usually exempt from Inheritance Tax.

The situation is more complicated if the surviving spouse or civil partner is not domiciled in the UK. We will explain below the meaning of some commonly used phrases relating to Inheritance Tax, excepted estates and small estates.

Excepted Estates

Many estates are classed as excepted estates. These are estates which do not have any Inheritance Tax to pay. So they can take a reduced disclosure route to probate. There are special rules for handling an ‘excepted estate’. An estate will usually be referred to as an excepted estate where:

  • The total value of the estate does not exceed the Nil Rate Band of IHT, currently £325,000. Any Potentially Exempt Transfers made by the deceased must also be taken into account.
  • An estate where the first spouse / civil partner has already died: the estate is valued at less than £650,000.
  • The gross value of the estate does not exceed £1,000,000 and there is no tax to pay because either all assets were left to the deceased’s spouse or civil partner living in the UK or to a ‘qualifying’ charity.
  • The deceased was domiciled outside the UK at the date of their death and had never been domiciled (or deemed domiciled for IHT purposes) in the UK during their lifetime and the gross value of their UK estate does not exceed £150,000.

The rules about excepted estates are concerned with gross values so in most cases the treatment of liabilities does not have any impact. If the estate is not an excepted estate a full Inheritance Tax account must be completed.

Small estates

If the deceased’s estate is worth less than £5,000 or the deceased owned everything jointly with their spouse or civil partner, probate is not usually needed.

Probate is the process of administering an estate of someone who has died in order to resolve all claims and distribute the assets of the deceased as per their final wishes.

This is called a ‘small estate’. Probate is almost always required when:

  • the deceased’s estate includes property
  • ... or land
  • held in their own name
  • ... or jointly under a tenancy in common arrangement.
Interested in our services?
Fill in your details and a member of our experienced team will be in touch shortly to discuss your needs.
We adhere to strict GDPR rules and do not reveal or sell your data to any third-parties. For more, please read our Privacy Policy.
Latest Insights
January 17, 2022
HMRC Investigations: What You Need to Know

Discovering that you are being investigated by HMRC can be very stressful, even if you are...

January 14, 2022
Business Transactions - Guide to Planning and Executing Efficiently

There are some transactions in business that are significant and require substantial forward-planning to be a...

January 12, 2022
Why Employee Equity is an Important Issue For Every Business

Being a business leader is about being willing to embrace innovation and be flexible about how...

January 10, 2022
An Employer’s Guide to Settlement Agreements

If you need to terminate the contract of an employee, a properly drafted settlement agreement can...

January 7, 2022
Taxation of Private Company Shares - What Should You Know?

Many companies opt to reward their employees with shares or options because of the manifold benefits...

January 5, 2022
January 2022 Inheritance Tax Changes – All You Need To Know

Taxes are never popular, but Inheritance Tax (IHT) is arguably subject to more criticism than any...

January 3, 2022
Buying Property for Your Children - What Options Are Available?

Getting on the property ladder for the first time is not easy, and as house prices...

January 1, 2022
How to Claim EIS Income Tax Relief in 2022

If you need to know how to claim EIS income tax relief and enjoy what is...

December 31, 2021
Disposing of a UK Rental Property: What to Look Out For

Becoming a landlord has been far more popular in recent years, with more property-owners than ever...

View Our latest insights »
Get the latest UK tax & business news and guidance delivered straight to your inbox
We care about the protection of your data. No spam. Unsubscribe anytime.
Copyright © 2022 Key Business Consultants LLP. Reg: E&W OC389322
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram