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HMRC Issues Update on Sale of Deceased's Land at Profit

HM Revenue & Customs (HMRC) has revised its guidance to clarify in which cases it will not allow a claim to increase the probate value of land that has been sold at a profit within three years of death.

The new rules apply where no tax is due on the sold land. Specifically, the UK's tax and customs authority will not accept claims if:

  • the chargeable estate is below the nil rate band
  • the sold land is exempt from tax
  • the sold land attracts 100% tax relief
  • The Institute of Chartered Accountants in England and Wales (ICAEW) said that the reason for this is down to the fact that there is no Inheritance Tax (IHT) payable, so there is no "appropriate person," or person liable for the IHT, to make the claim.

Most professional Executors will be delighted to read the updated guidance as it resolves the previous dilemma Executors faced, namely whether a sale at a profit of a deceased person's land should be reported.

Now it is quite clear that HMRC will not accept any increase in value provided that a Royal Institution of Chartered Surveyors (RICS) valuation was used for the probate value, the experts added.