Widows and widowers across the UK are missing out on millions of pounds due to the government’s complex inheritance tax (IHT) rules.

New rules mean married couples and civil partners can transfer the unused part of their IHT nil-rate band – the value of the estate not subject to IHT – to their surviving spouse or civil partner when they die.

However, for this to be accepted, the government demands a raft of paperwork to prove the full IHT allowance was not used by the deceased spouse.

Howard Burns, Wills and probate partner at national law firm, Lewis Hymanson Small, says, ‘The squeeze is affecting everyone, including HMRC, and they are scrutinising everything. All financial documents must be kept in order and wills should be re-examined.

‘Widows and widowers have to prove they have the right to claim the inheritance tax break.’

Documents required include wills, grants of probate, estate accounts, deeds of variation and other financial information in relation to the estate.

Burns says, ‘Many people are confused by the list of documents required. Unfortunately, it is likely that some people will end up with a big IHT bill just because of HMRC red tape.’

The new inheritance tax rules were introduced in the pre-budget statement in October 2007 and became law in the Finance Act 2008 on 21 July.