Does IHT ever lapse?

[JohnL951]

I have inherited a property valued at £450K. (The will has been executed and the property is mine absolutely)

IHT is due on any sale above £500K.

I intend to renovate the property and this will put the value above £500k.

My questions is:

Is there a time period after I inherited the property that I would not have to notify HMRC of the sale (since, together with inflation and renovations it would exceed £500k in value)?

I mean, do I still have to inform HMRC in 7 years, 20 years, etc. or is there a point at which no IHT is owing no matter what I sell the property for?

[AGoodman]

I'm not sure there is any obligation to inform HMRC that you have sold over the probate value. Where does the £500k threshold come from? If it turns out that you sell for a substantial profit which is so large that the original valuation must have been wrong, then the executors would have to consider putting in a corrective, but there is no absolute duty in all cases. Similarly, if HMRC raise an enquiry into the return and discover you have sold for a larger sum, they may well ask the executors to justify the original valuation (the usual justifications being the market movements).

There is no fixed time limit on this but IHT enquiries are usually raised within a year or two (it is a very slow dept).

[JohnL951]

Thanks for the response.

The £500K threshold comes from using unused NRB from my father who died first together with my mother's allowance.

The valuation of the house was done my two estate agents - given its poor condition they advised me it might be best to sell at auction.

However, once refurbished it could get as much as £600K.

I don't have any immediate plans to sell but might in several years once it is done up.

I was just curious whether I still had to inform HMRC when I did.

[AGoodman]

I'd missed the refurbishment. You should be fine, there is no general need to inform HMRC and no particular reason they would be interested if the increase in value has an explanation.