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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Interest in unadministered estates: gifts of residue

If the payments due to your estate are in the form of a gift of residue (the remaining part of the estate after all pecuniary and specific legacies have been paid), you must call for the file of the earlier deceased to check that the value returned is acceptable. If the value is not acceptable, you will have to raise enquiries with the taxpayer. If there is no file, then depending on the sums involved you will have to decide whether to approach the taxpayer for further information about the assets in the estate.

You must calculate an unadministered residuary estate on an assets less liabilities basis, where:

assets consist of all the assets held by the personal representatives (IHTM05012), and

liabilities mean the following, payable out of residue,

  • funeral, testamentary and administration expenses (including IHT)
  • legacies, and
  • any other liabilites of the personal representatives in that capacity.

You may need to apportion the assets and liabilities by reference to the extent of the beneficiary’s interest. This means that if the beneficiary’s interest is in a half share of the unadministered residuary estate, only half of the earlier estate’s liabilities may be allowed.

While you will see that the costs of administration are deductible, a discount for delay in administration is not usually accepted. This is because the deceased is treated as having owned the unadminstered assets from the date of the earlier death, IHTA/S91.