HMRC has introduced a new suite of inheritance tax (IHT) reporting forms and associated guidance, replacing the outdated IHT100 forms with a streamlined system designed to cater to different situations.
The overhaul of the IHT100 form replaces the more fiddly process where a reportable transfer would require an IHT100 form and an old style event form. Instead, HMRC has introduced a single new event form.
Our accountants and specialist tax accountants in St Albans welcome this change. IHT reporting can be a stressful process, especially if undertaken at a time of bereavement. However, Inheritance Tax is a complex subject and we recommend speaking to a local accountant that can provide individual advice for your situation.
How has the IHT100 forms changed?
The IHT100 form has now been replaced with a collection of forms to be used to report about specific occasions where inheritance tax is due on a trust.
The IHT100a form is now to be used for a gift when inheritance tax is to be paid immediately, while the IHT100b form has two versions: one for when the beneficiary’s interest in possession in a trust has ended in their lifetime and another for a termination on death (IHT100b (death)).
Elsewhere, there is now an IHT100h for assets previously held in an 18 to 25 trust.
The other forms in the IHT100 suite are:
- IHT100c for assets in a trust that are no longer ‘relevant property’
- IHT100d for assets in a trust that are ‘relevant property’ before each 10-year anniversary
- IHT100e for charges on a special trust
- IHT100f for the ending of a conditional exemption
These new forms came into effect from 12 August but HMRC will accept old versions of the IH100 forms and schedules until 31 December 2024.
Long overdue update
Helen Thornley, a technical officer at the Association of Taxation Technicians (ATT), noted that the new forms will hopefully improve the experience of reporting IHT events somewhat.
“The IHT100s have long been due an update – it was an ongoing issue when I joined the ATT back in 2017 – so I am delighted that updates have finally been made. It’s just a shame there’s still no online route to report and we are still on paper forms.
“Alas IHT is the poor relation of the other, bigger taxes and is bottom of the pile when it comes to getting funding for modernisation.”
Reduces scope of errors
From our accountants’ perspective, the update of the form and accompanying event forms is well overdue. The trouble with the old-style form was that it was a “one-size fits all” form and HMRC tried to cram too much information onto a single form. Not only was it was confusing for practitioners but it almost certainly led to mistakes being made.
By creating a separate combined IHT account and event form for different types of chargeable occasions, it is easier to decide which form is required for which lifetime IHT charge, thereby, hopefully reducing the scope for errors and helping the user to get the IHT reporting and calculation of the tax due, right first time.
The new IHT form also reminds the user that the trust should, where applicable, be registered with HMRC Trust Registration Service (TRS) and asks for a note of the UTR/URN for the trust, depending on whether it is tax-paying, or not.
Little glitches
While the new style forms bring significant improvements compared to the previous incarnation, practitioners have already spotted “a few little glitches” in the forms. Users are being asked to highlight if they find anything odd and then feed back to HMRC.
Some glitches when completing the new forms on-screen have been highlighted and these have been raised with HMRC. Hopefully these teething troubles will be quickly ironed out.
Hopefully this is a step in the right direction to drag IHT reporting into the 21st century, and make it less stressful for bereaved relatives at a difficult time.
Do you need to file an IHT report?
Although the new IHT forms provide a much-needed upgrade to Inheritance Tax reporting, it is advisable to seek guidance from an accountant or financial adviser. At Visionary Accountants in St Albans, we offer bespoke Inheritance Tax Planning and Trust Registration services. Don't get caught paying more inheritance tax than necessary; IHT and trusts are complex areas, so it is well worth obtaining professional advice from a reputable firm such as Visionary Accountants. Please get in touch today to see how we can help.