The following Wills & Probate Q&A Produced in partnership with Lynne Counsell of 9 Stone Buildings provides comprehensive and up to date legal information covering:
This Q&A deals with the issue of inheritance tax (IHT) payable when a proprietary estoppel claim is made against an estate. There has been an increase in such claims in recent years. The issue arises when a successful claim has been made against the estate of a deceased person. Is the IHT payable on the estate of the deceased or will the property form part of the estate of the person claiming proprietary estoppel?
Firstly, the principles regarding liability to IHT need to be examined. IHT is charged on the transfer of property passing on death subject to the various exemptions and reliefs. See generally: Inheritance tax (IHT)—overview for further information. Section 4(1) of the Inheritance Tax Act 1984 (IHTA 1984) provides that ‘on the death of any person tax shall be charged as if, immediately before his death, he had made a transfer of value and the value transferred by it had been equal to the value of his estate immediately before his death’.
The wording of IHTA 1984, s 4(1) means that the value transferred comprises the value of the deceased’s entire estate as at the date of death: Inheritance Tax Manual: HMRC Internal Manual (‘IHTM’). For these purposes, a person’s estate is defined in IHTA 1984, s 5(1) as ‘the aggregate of all the property to which he is beneficially entitled’ apart
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