A guide to Quick Succession Relief

What is quick succession relief

Quick Succession Relief (otherwise known as Successive Charges Relief) is designed to reduce the burden of inheritance tax where an estate is taxable on death and includes assets received within a five year period under an earlier transfer where tax was payable.

Conditions for quick succession relief

For any tax to be reduced by Quick Succession Relief, there must be:

1. An earlier chargeable transfer (either on death, a lifetime chargeable transfer, a failed PET or a transfer into a Trust)
2. Within five years of the death
3. On which tax was, or becomes, payable; and
4. The chargeable transfer must have increased the deceased’s estate.

If you are unsure as to whether Quick Succession Relief applies, a good indication is if there is a substantial figure estimated in the IHT400 calculation for an interest in a previous estate.

When does quick succession relief not apply?

Quick Succession Relief does not apply where the earlier transfer to the deceased was:

• Exempt from IHT charges (i.e, through a tax relief such as the ‘spouse exemption’)
• Chargeable but no tax was payable as it was within the relevant Nil Rate Band (£325,000 for a single person); or
• More than five years before the death
• Or, where no tax is payable in the deceased estate.

Quick Succession Relief is dealt with differently where the deceased had an ‘interest in possession’. In these circumstances, the application of Quick Succession Relief on the deceased’s death may be restricted and specific advice should be sought.

How to calculate quick succession relief

The amount of relief available depends on the amount of time that has passed since the earlier transfer was made. The relief is then tapered accordingly:

It is worth noting that the HMRC guidance states that if the death is on the anniversary of the earlier transfer, the taxpayer should be allowed the relief on the higher percentage.

The formula to claim Quick Succession Relief is as follows:

(A ÷ D) x B x C

A = Amount of increase of the deceased’s estate

B = Tax on an earlier chargeable transfer

C = The appropriate percentage (see table above)

D = Value of the earlier chargeable transfer.

If you are looking to claim Quick Succession Relief, you must complete the relevant sections of the  IHT400 Inheritance Tax Account and calculation.  It will also be necessary to include:

1. The name of the earlier deceased
2. The date of death
3. If known, the IHT reference number. 

What if the inherited asset is disposed of?

If the inherited tangible asset was disposed of, but the Estate retained the cash proceeds from the sale of the asset, Quick Succession Relief can still apply. For example, where a property was transferred to the beneficiary from the first estate, and then later sold. The cash sale proceeds still qualify for the relief in accordance with the formula as detailed above.

Conclusion

Quick Succession Relief calculations can be complicated and sometimes daunting. For bespoke advise as to whether Quick Succession Relief applies in an Estate that you are administering, please  get in touch with one of our specialists and we will be happy to assist you.