What is HMRC Form IHT400?
- MAZ
- Oct 5, 2023
- 35 min read
Updated: May 16
Index:
Understanding HMRC Form IHT400 – Your Key to Navigating UK Inheritance Tax
Step-by-Step Guide to Completing HMRC Form IHT400 – Avoiding Costly Mistakes
Calculating and Paying Inheritance Tax with HMRC Form IHT400 – Getting It Right
How an Inheritance Tax Accountant Can Help with HMRC Form IHT400 – A Detailed Case Study
Understanding HMRC Form IHT400 – Your Key to Navigating UK Inheritance Tax
So, you’ve just been handed the responsibility of sorting out someone’s estate, and the term “IHT400” keeps popping up. Don’t panic! HMRC Form IHT400 is the backbone of reporting an estate’s value to HM Revenue and Customs (HMRC) when Inheritance Tax (IHT) might be due. Let’s break it down step-by-step, with a focus on what UK taxpayers and business owners need to know as of April 2025. This form isn’t just paperwork—it’s your ticket to ensuring the estate is handled correctly, avoiding penalties, and potentially saving thousands in tax. Here’s everything you need to get started.
What Exactly Is Form IHT400?
Let’s kick things off with the basics. Form IHT400, officially called the “Inheritance Tax Account,” is a detailed document you submit to HMRC to report the value of a deceased person’s estate. If the estate’s value exceeds the IHT threshold—£325,000 for the 2024-2025 tax year—or if it doesn’t qualify as an “excepted estate,” you’ll need to fill this out. Excepted estates are those below the threshold or fully exempt (e.g., passing to a spouse or charity), but we’ll dive into those later. For now, know that IHT400 is your way of telling HMRC, “Here’s what the deceased owned, owed, and gave away—now tell me what tax is due.”
The form is comprehensive, covering assets like property, savings, investments, and even gifts made in the seven years before death. It’s not a quick job—you’ll need to gather a lot of info, and accuracy is non-negotiable. Get it wrong, and you could face penalties or delays in probate, which is the legal process to distribute the estate. The good news? HMRC provides guidance notes (IHT400 Notes 2022, updated April 2025) to help you through it.
Why Does IHT400 Matter to You?
Now, let’s talk about why this form is a big deal. If you’re an executor (named in the will) or an administrator (if there’s no will), it’s your job to complete IHT400 if the estate doesn’t qualify as excepted. This applies whether you’re a family member, friend, or professional handling a business owner’s estate. The form determines if IHT is owed, at a rate of 40% on anything above the £325,000 nil-rate band (or £500,000 if the Residence Nil Rate Band applies—more on that later). For example, an estate worth £600,000 could face a tax bill of £110,000 without reliefs. That’s money that could otherwise go to beneficiaries.
In 2023-2024, HMRC collected £7.5 billion in IHT, a 4% increase from the previous year, reflecting rising property values and frozen tax thresholds (source: HMRC Annual Report 2024). With no changes to the nil-rate band announced in the Spring Budget 2025, estates are increasingly likely to hit the taxable threshold, especially for business owners with valuable assets like company shares or property.
When Do You Need to File IHT400?
Here’s where it gets practical. You must submit IHT400 within 12 months of the person’s death, but don’t dawdle—any IHT due needs to be paid within six months to avoid interest charges (currently 7.75% per year, as per HMRC’s April 2025 rates). For deaths on or after 1 January 2022, you’ll also need to wait for HMRC to issue a unique reference code after submitting IHT400, which you use to apply for probate in England and Wales (source: GOV.UK, updated April 2025). This code confirms HMRC has processed your form and calculated any tax due.
Be careful! If you miss the six-month deadline for paying IHT, interest starts piling up, and HMRC isn’t shy about chasing late payments. For example, a £50,000 tax bill left unpaid for six months could rack up £1,937.50 in interest. And if the estate involves complex assets like trusts or foreign property, you’ll need extra time to gather details, so start early.
Key Components of Form IHT400
Right, let’s get into the nitty-gritty. IHT400 is a beast of a form, with multiple sections and supplementary schedules (IHT401 to IHT436) for specific assets or situations. Here’s a quick rundown of the main sections:
Section 1: Personal Details – Info about the deceased (name, date of death, domicile) and the person submitting the form (you, the executor/administrator).
Section 2: Assets – List all assets, from bank accounts and property to shares, personal belongings, and business interests. Valuations must be accurate—HMRC may involve the Valuation Office Agency (VOA) to check property values.
Section 3: Liabilities – Debts like mortgages, loans, or funeral costs. These reduce the estate’s taxable value.
Section 4: Gifts and Transfers – Details of gifts made in the seven years before death, as these may be taxable if they exceed exemptions.
Section 5: Reliefs and Exemptions – Claim reliefs like Business Property Relief (BPR) or Agricultural Property Relief (APR), which can slash the tax bill.
For business owners, schedules like IHT413 (business interests) and IHT414 (agricultural property) are critical. For example, if the deceased owned a family business worth £200,000, BPR could reduce the taxable value by 50% or 100%, depending on the business type.
Structure of Form IHT400
Table 1: Key IHT Thresholds and Rates (2024-2025 Tax Year)
Threshold/Rate | Amount/Details |
Nil-Rate Band | £325,000 – No IHT on estates below this (frozen until 2028) |
Residence Nil-Rate Band (RNRB) | Up to £175,000 – Available if home is left to direct descendants |
IHT Rate | 40% on taxable value above thresholds |
Interest on Late IHT Payments | 7.75% per year (as of April 2025, tied to Bank of England base rate + 2.5%) |
Annual Gift Exemption | £3,000 per person, per year – Gifts above this may be taxable if within 7 years |
Source: GOV.UK, HMRC IHT Rates and Tables, updated April 2025
Common Scenarios Requiring IHT400
Now, consider this: Not every estate needs IHT400. If the estate is worth less than £325,000 and passes to a spouse or civil partner, it’s likely an excepted estate, and you might use the simpler IHT205 form instead. But here are some situations where IHT400 is mandatory:
Estates Over £325,000: If the total value (after debts) exceeds the nil-rate band, even if no tax is due after reliefs.
Gifts Within Seven Years: Gifts over the £3,000 annual exemption (or other small gift allowances) made in the last seven years are added back to the estate.
Trusts or Complex Assets: If the deceased had a right to benefit from a trust (use IHT418) or owned foreign assets (IHT401).
Business or Agricultural Property: If the estate includes a farm or business, you’ll need IHT400 to claim BPR or APR.
For instance, take Marjorie from Leeds, a fictional business owner who passed away in 2024, leaving a £700,000 estate, including a £400,000 home and a £150,000 family business. Her executor, her son Alfie, needs IHT400 because the estate exceeds £325,000, even though BPR might reduce the business’s taxable value.
Practical Tips for Getting Started
None of us is a tax expert, but here’s how to approach IHT400 without losing your mind. First, download the form from GOV.UK—it’s an interactive PDF that requires Adobe Reader (source: GOV.UK, IHT400 Accessibility Statement). You can’t save a partially completed form, so gather all documents beforehand:
Death certificate and will (if any).
Valuations for property, bank accounts, investments, and personal items.
Records of debts, funeral costs, and gifts made in the last seven years.
Details of any trusts or business interests.
Next, use HMRC’s online tax checker (introduced in 2023) to confirm whether IHT is due before diving into the form. This tool, accessible via GOV.UK, helps you estimate the tax liability and flags if IHT400 is necessary. If you’re unsure about valuations—say, for a quirky antique collection or a small business—consider hiring a professional valuer. HMRC can challenge undervaluations, and disputes can delay probate by months.
What’s Changed in 2025?
Now, it shouldn’t surprise you that HMRC tweaks IHT400 regularly. As of April 2025, key updates include:
Unique Reference Code: Post-submission, HMRC issues a code for probate applications in England and Wales, streamlining the process (source: GOV.UK, updated April 2025).
Tax Checker Guidance: The form now emphasizes using the online tax checker to avoid errors.
Death Benefits Clarification: References to “lump sums” in the 2022 notes have been updated to “death benefits” to align with legislative changes.
These updates make the process slightly smoother but don’t reduce the need for accuracy. For business owners, the stakes are higher—misvaluing a business could lead to a hefty tax bill or HMRC scrutiny.
Who Should Fill in IHT400 in the UK?
Executors and Administrators
The primary responsibility for filling in the IHT400 form usually falls on the shoulders of the executor if there's a will, or the administrator if there isn't one. These individuals are legally responsible for administering the deceased's estate, which includes valuing assets, paying off debts, and distributing the remaining assets to beneficiaries. They are also the ones who must ensure that any Inheritance Tax due is correctly calculated and paid.
Solicitors and Legal Representatives
In some cases, the executor or administrator may choose to delegate the task of filling in the IHT400 form to a solicitor or other legal representative. This is particularly common in situations where the estate is complex, involves numerous assets, or where there are potential legal issues that require expert advice. Solicitors can provide the necessary legal framework and ensure that all obligations are met.
Inheritance Tax Accountants
As discussed in the previous article, Inheritance Tax Accountants specialize in the complexities of the UK's Inheritance Tax laws. They can be hired to fill in the IHT400 form, particularly if the estate involves complicated financial assets like stocks, business ownership, or overseas investments. Their expertise ensures that the form is filled out accurately and that all possible exemptions and reliefs are taken advantage of.
Family Members
In simpler cases, especially where the estate is small and there are no contentious issues among beneficiaries, a family member may take on the task of filling in the IHT400 form. This is usually a close relative who is also a beneficiary of the estate. However, it's crucial that this person understands the legal obligations involved and is comfortable navigating the complexities of Inheritance Tax laws.
Professional Agents
In some instances, professional agents who are not necessarily accountants or solicitors may be hired to handle the estate. These could be professional probate researchers or specialists in estate management. They can fill in the IHT400 form as part of their service package, which often includes tracing missing beneficiaries, valuing assets, and even selling property.
Joint Responsibility
It's worth noting that more than one person can share the responsibility for filling in the IHT400 form. This is often the case when there are multiple executors or administrators. In such situations, it's crucial to have clear communication and agreement among all parties involved to ensure that the form is filled out consistently and accurately.
Overseas Representatives
If the deceased was a resident of another country but had assets in the UK, an overseas representative may be required to fill in the IHT400 form. This could be a legal or financial advisor based in the country where the deceased lived. They would work in conjunction with UK-based advisors to ensure that the form complies with UK laws.
Trusts and Trustees
If the deceased had set up a trust, the trustees may be responsible for filling in the IHT400 form, especially if the assets in the trust are subject to Inheritance Tax. Trustees have a legal obligation to manage the trust in the best interests of the beneficiaries, which includes ensuring that all tax obligations are met.
Precautions and Considerations
Regardless of who fills in the IHT400 form, it's essential to exercise due diligence. Mistakes or omissions can result in financial penalties and could delay the probate process. Therefore, even if you're taking on this task yourself, it may be wise to consult with professionals to double-check your work.
In short, the responsibility for filling in the IHT400 form can fall on various individuals or entities, depending on the complexity of the estate and the wishes of the deceased. From executors and administrators to legal representatives and family members, each has a role to play in ensuring that the estate's tax obligations are met in a timely and accurate manner.
Step-by-Step Guide to Completing HMRC Form IHT400 – Avoiding Costly Mistakes
Right, so you’ve got a handle on what Form IHT400 is and why it’s important. Now let’s roll up our sleeves and walk through how to actually fill it out. Completing IHT400 can feel like navigating a maze blindfolded, but with a clear plan, you can avoid the traps that trip up many UK taxpayers and business owners. This part is all about giving you a practical, step-by-step guide to getting it right, with tips to dodge penalties and keep HMRC happy. We’ll use real-world scenarios and verified data as of April 2025 to make this as actionable as possible.
Gathering the Right Information First
Before you even touch the IHT400 form, you need to play detective. The form demands precise details about the deceased’s estate, and guessing won’t cut it. Start by collecting:
Death Certificate: Confirms the date of death, which sets the valuation date for assets.
Will (if any): Determines who inherits and whether trusts are involved.
Asset Details: Bank statements, property deeds, share certificates, and valuations for items like art or jewellery.
Liabilities: Mortgage statements, loan agreements, and funeral cost receipts.
Gift Records: Bank transfers or documents showing gifts made in the last seven years.
For example, imagine you’re handling the estate of Priya from Bristol, who passed away in March 2025. She left a £450,000 house, £100,000 in savings, and gave £20,000 to her daughter two years ago. You’ll need valuations as of the date of death, plus proof of that gift. If Priya owned a small café, you’d also need its latest accounts or a professional valuation for IHT413.
Pro Tip: Use HMRC’s online estate valuation tool (available via GOV.UK as of April 2025) to estimate asset values. For property, get a professional valuation if the market value is unclear—HMRC often cross-checks with the Valuation Office Agency.
Breaking Down the IHT400 Sections
Now, let’s tackle the form itself. IHT400 is split into sections, and you’ll need to complete supplementary schedules for specific assets. Here’s how to approach the key parts, with practical advice to keep you on track.
Section 1: Personal Details
This bit’s straightforward but don’t rush it. You’ll need the deceased’s full name, date of birth, date of death, and domicile status (where they were legally resident for tax purposes). If Priya was domiciled outside the UK but owned UK assets, you’d also need IHT401 for foreign assets. Include your details as the executor/administrator, plus any co-executors. Double-check spellings and dates—HMRC will reject forms with errors.
Section 2: Assets in the Estate
Here’s where things get meaty. You’ll list all assets owned at the time of death, including:
Bank Accounts and Savings: Include account numbers and balances.
Property: UK and foreign properties, with valuations (use IHT405 for properties).
Shares and Investments: List quoted and unquoted shares (IHT411 and IHT412).
Personal Possessions: Cars, jewellery, or collectibles (IHT407).
Business Interests: For business owners, detail the company’s value and structure (IHT413).
Be careful! Undervaluing assets is a common mistake. For Priya’s café, a valuation based on outdated accounts could trigger an HMRC query. If you’re unsure, hire a chartered accountant or valuer specializing in IHT. In 2023-2024, HMRC raised £250 million from IHT compliance checks, often targeting undervalued estates (source: HMRC Compliance Report 2024).
Section 3: Liabilities
Debts reduce the estate’s taxable value, so don’t skip this. Include mortgages, loans, credit card debts, and funeral costs. For Priya’s estate, her £200,000 mortgage and £5,000 funeral expenses would lower the taxable value to £345,000 before reliefs. Ensure debts are legitimate—HMRC won’t allow deductions for loans that were never intended to be repaid.
Section 4: Gifts and Transfers
Now, consider this: Gifts made in the seven years before death can be taxable. Priya’s £20,000 gift to her daughter exceeds the £3,000 annual exemption, so it’s added back to the estate unless covered by other reliefs (e.g., normal expenditure out of income). Use IHT403 to report gifts and calculate any “taper relief” if the gift was made three to seven years before death.
Table 2: Taper Relief for Gifts (2024-2025 Tax Year)
Years Before Death | Tax Reduction | Effective IHT Rate |
Less than 3 years | 0% | 40% |
3 to 4 years | 20% | 32% |
4 to 5 years | 40% | 24% |
5 to 6 years | 60% | 16% |
6 to 7 years | 80% | 8% |
Source: GOV.UK, Inheritance Tax Gifts, updated April 2025
Section 5: Reliefs and Exemptions
This is where you can save serious money. Key reliefs include:
Spouse/Civil Partner Exemption: Assets passing to a spouse or civil partner are IHT-free.
Residence Nil Rate Band (RNRB): Up to £175,000 extra allowance if the home goes to direct descendants (total £500,000 with the nil-rate band).
Business Property Relief (BPR): 50% or 100% relief on business assets, like Priya’s café.
Charity Exemption: Donations to UK charities are IHT-free, and if 10% of the estate goes to charity, the IHT rate drops to 36%.
For Priya’s estate, applying the RNRB (£175,000) and BPR (say, 100% on the £100,000 café) could reduce the taxable value to £70,000, with a tax bill of £28,000 at 40%.
Common Pitfalls to Avoid
None of us wants to deal with HMRC chasing us down. Here are mistakes to steer clear of:
Incomplete Schedules: Forgetting schedules like IHT405 for property or IHT418 for trusts can delay probate.
Incorrect Valuations: Over- or under-valuing assets triggers HMRC scrutiny. In 2024, 15% of IHT400 submissions were queried for valuation errors (source: HMRC Processing Data 2024).
Missing Deadlines: Submit within 12 months, but pay IHT within six months to avoid 7.75% interest (source: GOV.UK, IHT Interest Rates, April 2025).
Ignoring Gifts: Failing to report taxable gifts can lead to penalties up to 100% of the tax due.
Practical Example: Priya’s Estate
Let’s walk through Priya’s case. Her estate totals £550,000 (£450,000 house, £100,000 café, £20,000 gift, minus £200,000 mortgage and £5,000 funeral costs). After applying the £325,000 nil-rate band and £175,000 RNRB (since the house goes to her daughter), the taxable value is £50,000. BPR wipes out the café’s value, leaving a tax bill of £20,000 (£50,000 × 40%). You’d complete IHT400, IHT405 (house), IHT413 (café), and IHT403 (gift), submitting them with valuations and supporting documents.
Tools to Make It Easier
So, the question is: How do you stay organized? HMRC’s online tax checker (GOV.UK, updated 2025) estimates IHT liability before you start. For complex estates, software like TaxCalc or CCH can streamline calculations, especially for business assets. If Priya’s café has multiple shareholders or a partnership agreement, these tools can help allocate BPR correctly.
Special Considerations for Business Owners
If you’re a business owner or handling a business-heavy estate, IHT400 gets trickier. Unquoted shares (e.g., in a family company) require a professional valuation, and BPR eligibility depends on the business type. Trading businesses qualify for 100% relief, but investment companies (e.g., property rentals) often don’t. In 2023-2024, HMRC rejected 12% of BPR claims due to incorrect classifications (source: HMRC BPR Statistics 2024). Get advice from a tax accountant to avoid this trap.
How to Fill Form IHT400: A Question-by-Question Guide
Filling out HMRC Form IHT400, the Inheritance Tax (IHT) account, is a critical step for UK taxpayers and executors handling an estate where IHT may be due or the estate doesn’t qualify as an excepted estate. This guide provides a step-by-step, question-by-question walkthrough of the IHT400 form, based on the April 2025 version, to help you complete it accurately and avoid costly mistakes. We’ll use a hypothetical estate for Mr. James Thompson, who died in February 2025, to illustrate sample answers. His estate includes a £600,000 house, £100,000 in savings, a £150,000 business, and a £20,000 gift made three years ago, with a £200,000 mortgage and £5,000 funeral costs. Let’s dive into the process, ensuring clarity and compliance with HMRC’s requirements.
Before You Start
Before tackling IHT400, gather all relevant documents: the death certificate, will, asset valuations (property, bank statements, business accounts), liabilities (mortgages, loans), and gift records for the last seven years. You’ll also need an IHT reference number if tax is due, obtainable via GOV.UK or IHT422 at least three weeks before submission (Page 1). Use black or blue ink, send copies (not originals) of documents, and refer to the IHT400 Notes for guidance. Submit within 12 months of death, but pay any IHT within six months to avoid 7.75% interest (April 2025 rate, GOV.UK).
Question-by-Question Guide
Page 1: About the Deceased
1. Deceased’s Name
Purpose: Identifies the deceased.
Sample Answer: Title: MR, Surname: Thompson, First names: James Edward
Explanation: Enter the full legal name as per the death certificate or will. Double-check for accuracy to avoid HMRC rejections.
2. Date of Death
Purpose: Sets the valuation date for assets and tax deadlines.
Sample Answer: 15 02 2025
Explanation: Use DD MM YYYY format. For James, who died 15 February 2025, this triggers a 31 August 2025 payment deadline.
3. Inheritance Tax Reference Number
Purpose: Links the form to HMRC’s payment system.
Sample Answer: IHT123456789
Explanation: Obtain this via GOV.UK or IHT422 if tax is due. Leave blank if no tax is owed.
4. Was the Deceased Male or Female?
Purpose: Records the deceased’s gender.
Sample Answer: Male (ticked)
Explanation: Tick the appropriate box based on legal records.
5. Deceased’s Date of Birth
Purpose: Verifies identity and age for tax purposes.
Sample Answer: 10 03 1955
Explanation: Use DD MM YYYY format from the birth certificate.
6. Did the Deceased Die On or Before 5 April 2025?
Purpose: Determines applicable tax rules.
Sample Answer: Yes (ticked)
Explanation: James died in February 2025, so tick “Yes.” If “No,” additional rules apply (see IHT400 Notes).
6a. Where Was the Deceased Domiciled at the Date of Death?
Purpose: Establishes tax jurisdiction.
Sample Answer: England and Wales (ticked)
Explanation: James lived in London, so tick “England and Wales.” If domiciled outside the UK, complete IHT401.
6b. Was the Deceased a Long-Term UK Resident?
Purpose: Assesses residency for non-domiciled individuals.
Sample Answer: Yes (ticked)
Explanation: James was a long-term UK resident. If “No,” complete IHT401a.
Page 2: About the Deceased (Continued)
7. Has the Legitim Fund Been Discharged in Full? (Scotland Only)
Purpose: Applies to Scottish estates with legal rights claims.
Sample Answer: N/A
Explanation: James was domiciled in England, so skip this. If in Scotland, explain in the Additional Information section if “No.”
8. Was the Deceased…
Purpose: Determines marital status for exemptions.
Sample Answer: Widowed (ticked)
Explanation: James’s wife predeceased him, so tick “Widowed.” This affects reliefs like spouse exemption.
9. Date of Marriage/Civil Partnership
Purpose: Relevant for spouse exemption if applicable.
Sample Answer: N/A
Explanation: James was widowed, so leave blank unless married at death.
10. Who Survived the Deceased?
Purpose: Identifies beneficiaries for reliefs like RNRB.
Sample Answer: Children (ticked), Number: 2
Explanation: James’s two children, Sarah and Tom, survived him. Tick all applicable boxes and specify numbers.
11. Deceased’s Last Known Permanent Address
Purpose: Confirms residence for valuation and probate.
Sample Answer: 12 Elm Street, London, SW1A 1AA
Explanation: Use the full address, including postcode, from recent records.
12. Was the Property in Box 11 Owned or Part-Owned?
Purpose: Verifies property ownership for IHT405.
Sample Answer: Yes (ticked)
Explanation: James owned his home, so tick “Yes.” If “No,” explain (e.g., “lived with son”).
13. Deceased’s Occupation
Purpose: Provides context for business reliefs.
Sample Answer: Retired Shop Owner
Explanation: James ran a store before retiring. Include former occupation if retired.
14. Deceased’s National Insurance Number
Purpose: Links to HMRC records.
Sample Answer: QQ123456C
Explanation: Find this on tax documents. Leave blank if unknown.
15. Deceased’s Income Tax Number or UTR
Purpose: Connects to tax history.
Sample Answer: 1234567890
Explanation: Use the Unique Taxpayer Reference from tax returns, if known.
Page 3: Contact Details
16. Did Anyone Act Under a Power of Attorney?
Purpose: Identifies legal representatives.
Sample Answer: No (ticked)
Explanation: No power of attorney was granted. If “Yes,” enclose a copy.
17. Name and Address of Firm/Person Dealing with the Estate
Purpose: Identifies the executor or agent.
Sample Answer: Name: Sarah Thompson, Address: 25 Oak Road, London, SW2B 2BB
Explanation: Sarah, James’s daughter, is the executor. Include firm details if using a solicitor.
18. Contact Name
Purpose: Specifies the primary contact.
Sample Answer: Sarah Thompson
Explanation: Same as box 17 unless different.
19. Phone Number
Purpose: For HMRC queries.
Sample Answer: 020 1234 5678
Explanation: Provide a reliable contact number.
20. Contact’s Reference
Purpose: Tracks correspondence.
Sample Answer: ST/JT/2025
Explanation: Use a unique reference or leave blank if none.
21–23. Account Name, Sort Code, Account Number
Purpose: For IHT refunds.
Sample Answer: Account Name: Sarah Thompson, Sort Code: 12-34-56, Account Number: 12345678
Explanation: Provide bank details for Faster Payments refunds, identified by the IHT reference.
Page 3–4: Deceased’s Will
24. Did the Deceased Leave a Will?
Purpose: Determines asset distribution.
Sample Answer: Yes (ticked)
Explanation: James left a will, so tick “Yes” and enclose a copy.
25. Is the Address in the Will the Same as Box 11?
Purpose: Verifies residence consistency.
Sample Answer: Yes (ticked)
Explanation: James’s will lists 12 Elm Street, matching box 11.
26. What Happened to the Property in the Will?
Purpose: Tracks changes to the residence.
Sample Answer: N/A
Explanation: Skip since box 25 is “Yes.” Otherwise, explain sales or replacements.
27. Are All Assets in the Will Included?
Purpose: Ensures all willed assets are reported.
Sample Answer: Yes (ticked)
Explanation: All of James’s willed assets (house, savings, business) are included.
28. Items Not Included in the Estate
Purpose: Reports disposed assets.
Sample Answer: Item: £20,000 cash, Given to: Sarah Thompson, Date: 10 02 2022, Value: £20,000, Proceeds: Gifted
Explanation: The £20,000 gift is reported on IHT403, not the estate.
Page 5–6: Schedules (Boxes 29–48)
These questions identify which schedules to complete based on the estate’s assets and reliefs. Answer “Yes” or “No” and complete the relevant schedules before proceeding. For James’s estate:
29a. Residence Nil Rate Band: Yes (IHT435, as the house goes to children).
29b. Transfer of Unused RNRB: No (James’s wife predeceased, no transferable RNRB).
29c. Transfer of Unused Nil Rate Band: Yes (IHT402, James’s wife left unused nil-rate band).
30. Gifts: Yes (IHT403, £20,000 gift).
31. Jointly Owned Assets: No (all assets in James’s sole name).
32. Houses, Land: Yes (IHT405, £600,000 house).
33. Bank Accounts: Yes (IHT406, £100,000 savings).
34. Household Goods: Yes (IHT407, minimal value).
35. Goods Donated to Charity: No.
36. Pensions: No.
37. Life Assurance: No.
38–39. Stocks and Shares: No.
40. Business Relief: Yes (IHT413, £150,000 business).
41. Farms: No.
42–45. Other Assets/Trusts: No.
46. Debts Owed by Deceased: Yes (IHT419, £200,000 mortgage, £5,000 funeral).
47. National Heritage: No.
48. Do You Have All Schedules?: Yes.
48a–b. Successive Charges/Double Taxation Relief: No.
Complete schedules IHT402, IHT403, IHT405, IHT406, IHT407, IHT413, IHT419, and IHT435 before proceeding.
Page 7–8: Estate in the UK
49–50. Jointly Owned Assets: Enter “0” (James owned all assets solely).
51. Deceased’s Residence: £600,000 (IHT405, box 7).
52. Bank Accounts: £100,000 (IHT406, box 1).
53–57, 60–76. Other Assets: Enter “0” except for
69. Businesses: £150,000 (IHT413).
77–79. Totals: Sum column A (£100,000) and column B (£750,000). Gross total: £850,000.
Page 11: Exemptions and Reliefs
93. Exemptions and Reliefs: RNRB (£175,000), BPR (£150,000, 100% relief).
Sample Answer: “Residence Nil Rate Band: £175,000 (house to children). Business Property Relief: £150,000 (100% on shop).”
Total Deducted: £325,000. 94–96. Net Estate: £850,000 - £325,000 = £525,000.
Page 12: IHT Calculation
109. Reduced Rate (36%)?: No.
110. Instalments?: Yes, £240,000 (house tax).
111. RNRB: £175,000.
112. Chargeable Estate: £525,000 - £175,000 = £350,000.
113. Gifts: £17,000 (IHT403, £20,000 - £3,000 exemption).
114. Value Before Nil Rate Band: £350,000 + £17,000 = £367,000.
115. Nil Rate Band: £325,000.
116. Transferable Nil Rate Band: £325,000 (IHT402).
117. Total Nil Rate Band: £650,000.
118. Value Chargeable: £367,000 - £650,000 = £0.
119. IHT: £0 (estate below threshold).
Page 13: Direct Payment Scheme and Declaration
120. Direct Payment Scheme: No.
121. Type of Grant: Probate.
122. Application Location: England and Wales.
Declaration: Tick schedules used (IHT402, IHT403, IHT405, IHT406, IHT407, IHT413, IHT419, IHT435). Sign and date.
Page 14–15: Signatures and Email
Signatures: All executors (Sarah) sign, providing details if acting professionally.
Email Acknowledgement: Tick if you accept the email disclaimer and provide an email address.
Page 16–17: Checklist and Additional Information
Complete the checklist, enclosing copies of the will, valuations, and IHT423 if using the Direct Payment Scheme. Use page 17 for additional details, e.g., explaining gifts on IHT403.
Final Tips
Double-Check Valuations: Use professional valuers for property (£600,000) and businesses (£150,000) to avoid HMRC disputes (15% of 2024 submissions queried, HMRC Compliance Data 2024).
Maximize Reliefs: James’s estate saved £60,000 via BPR and £70,000 via RNRB.
Meet Deadlines: Submit by 15 February 2026, pay by 31 August 2025.
Get Help: For complex estates, consult an IHT accountant like My Tax Accountant (https://www.mytaxaccountant.co.uk/inheritance-tax).
NOTE: Please remember these are ONLY IHT400 Sample Answers - NOT your answers.
Where to Send the Filled IHT400 Form
Once you've completed the IHT400 form, it needs to be sent to HM Revenue and Customs (HMRC) for processing. The form, along with any supplementary pages and required documents, should be mailed to the following address:
HM Revenue and Customs
BX9 1HT
United Kingdom
Calculating and Paying Inheritance Tax with HMRC Form IHT400 – Getting It Right
So, you’ve gathered all the info and filled out Form IHT400. Now comes the part where you figure out how much Inheritance Tax (IHT) is actually owed and how to pay it without tripping over HMRC’s rules. This section is all about crunching the numbers, exploring payment options, and handling potential hiccups like disputes or delays. We’ll use real-world examples and verified data as of April 2025 to make this crystal clear for UK taxpayers and business owners. Let’s dive in and make sure you’re not caught out.
How to Calculate IHT Accurately
Let’s start with the maths—don’t worry, it’s not as scary as it sounds. Once you’ve valued the estate on IHT400, you subtract any debts, exemptions, and reliefs to get the taxable value. Anything above the nil-rate band (£325,000) and Residence Nil Rate Band (RNRB, up to £175,000 if applicable) is taxed at 40%. If the estate donates 10% or more to charity, the rate drops to 36%. Here’s a quick example:
Imagine you’re dealing with the estate of Idris from Cardiff, who passed away in February 2025. His estate includes a £600,000 house, £150,000 in savings, a £200,000 family printing business, and a £50,000 gift made four years ago. Debts total £100,000 (mortgage and funeral costs). Here’s how it breaks down:
Total Estate Value: £600,000 + £150,000 + £200,000 + £50,000 = £1,000,000
Minus Debts: £1,000,000 - £100,000 = £900,000
Reliefs: 100% Business Property Relief (BPR) on the £200,000 business = £0 taxable. RNRB (£175,000) applies as the house goes to his son. Nil-rate band = £325,000.
Taxable Value: £900,000 - £175,000 - £325,000 = £400,000
Gift Taper Relief: The £50,000 gift (after £3,000 annual exemption) is taxed at 24% (4-5 years taper, see Table 2 in Part 2) = £11,520
IHT Due: (£400,000 - £47,000) × 40% + £11,520 = £141,520 + £11,520 = £153,040
Use HMRC’s online IHT calculator (available at GOV.UK, updated April 2025) to double-check your figures. It’s free and catches errors before submission.
UK Inheritance Tax Calculator
Payment Deadlines and Interest
Be careful! IHT must be paid within six months of the month of death, or you’ll face interest at 7.75% per year (HMRC’s rate as of April 2025, tied to the Bank of England base rate + 2.5%). For Idris’s estate, if death was February 2025, the deadline is 31 August 2025. Miss it, and a £153,040 tax bill could accrue £5,928 in interest over six months. HMRC allows payments in instalments for certain assets, like property or business interests, over up to 10 years at 0% interest if you apply via IHT400 (Schedule IHT420).
For example, Idris’s son might pay the £120,000 tax on the house in 10 annual instalments of £12,000, easing cashflow. You’ll need to confirm this option on IHT400 and provide bank details for direct debit. In 2023-2024, 18% of estates used instalments, saving families from liquidating assets under pressure (source: HMRC IHT Statistics 2024).
Table 3: IHT Payment Options and Deadlines (2024-2025 Tax Year)
Payment Method | Details |
Full Payment Deadline | Within 6 months of the month of death (e.g., 31 Aug 2025 for Feb 2025 death) |
Instalment Option | Up to 10 years for property/business assets, 0% interest, via IHT420 |
Interest on Late Payment | 7.75% per year (as of April 2025) |
Payment Methods | Bank transfer, online payment, or cheque (details on GOV.UK) |
Source: GOV.UK, Paying Inheritance Tax, updated April 2025
How to Pay IHT
Now, let’s talk about getting the money to HMRC. You can pay IHT via:
Online Banking: Use the HMRC bank details on GOV.UK, quoting the IHT reference number (issued after IHT400 submission).
Cheque: Post to HMRC with the payslip from IHT400.
Direct Debit: For instalments, set up via IHT420.
You’ll need the estate’s IHT reference number, which HMRC provides after processing IHT400 (usually within 20 working days). For Idris’s estate, you might pay part upfront (e.g., £33,040 for savings and gifts) and the rest in instalments for the house. If the estate lacks cash, you can apply for a “grant on credit” from HMRC to release bank funds before probate, but this requires IHT423 and proof of insufficient liquidity.
Handling HMRC Disputes
None of us wants to lock horns with HMRC, but disputes happen. Common issues include:
Valuation Disagreements: HMRC may challenge property or business valuations. In 2024, 10% of IHT400 submissions led to valuation disputes, often resolved via the Valuation Office Agency (source: HMRC Compliance Data 2024).
Relief Denials: BPR or APR claims can be rejected if the business doesn’t qualify (e.g., if Idris’s printing firm was mainly an investment vehicle).
Gift Misreporting: Missing or incorrect gift details can trigger penalties up to 100% of the tax due.
If HMRC queries your IHT400, they’ll send a “calculation letter” within 60 days of submission. Respond promptly with evidence (e.g., updated valuations or business accounts). For Idris’s case, if HMRC disputes the £200,000 business valuation, provide recent accounts or a professional valuation from a chartered accountant. You can appeal via HMRC’s review process or escalate to the First-tier Tribunal if needed (details at GOV.UK, IHT Appeals).
Special Considerations for Business Owners
So, the question is: What if the estate includes a business? For business owners like Idris, BPR is a game-changer, but it’s not automatic. You must prove the business is a trading entity, not an investment one. For example, a shop qualifies for 100% BPR, but a property rental firm might not. In 2023-2024, HMRC rejected 12% of BPR claims due to misclassification (source: HMRC BPR Statistics 2024). If Idris’s printing business has mixed activities (e.g., some rental income), you’ll need to apportion BPR carefully on IHT413.
Another tip: If the business is cash-poor, consider instalments for IHT on business assets. This saved a Manchester family business £80,000 in 2024 by avoiding a forced sale (case study from GOV.UK, IHT Case Studies 2024). Also, check if the deceased transferred business shares as gifts—taper relief could apply.
Practical Example: Idris’s Payment Plan
Let’s revisit Idris’s £153,040 tax bill. His son, the executor, opts for instalments on the house (£120,000 over 10 years = £12,000/year) and pays the £33,040 (savings and gift tax) upfront via bank transfer. He submits IHT420 with IHT400, setting up direct debit for instalments. To avoid interest, he pays the upfront amount by 31 August 2025, using funds from Idris’s savings. HMRC issues a probate code after processing, allowing probate to proceed.
Tools and Resources
Now, consider this: HMRC’s tools can save you time. The IHT calculator on GOV.UK (updated April 2025) estimates tax and flags reliefs. For complex estates, software like TaxCalc or IRIS can automate calculations, especially for business assets or trusts. If you’re stuck, HMRC’s IHT helpline (0300 123 1072) offers guidance, though they won’t complete the form for you. You can also use our above-referred IHT calculator.
Rare Scenarios to Watch For
Not every estate is straightforward. Here are less common issues to flag:
Foreign Assets: If Idris owned a holiday home in Spain, use IHT401 and check double taxation treaties to avoid paying IHT twice.
Trusts: If the deceased benefited from a trust, IHT418 is mandatory, and tax calculations get complex.
Contingent Liabilities: Debts like guarantees for business loans may not be deductible unless paid (HMRC Guidance, April 2025).
How an Inheritance Tax Accountant Can Help with HMRC Form IHT400 – A Detailed Case Study
Now, let’s be honest—tackling HMRC Form IHT400 can feel like wrestling a bear while blindfolded. For UK taxpayers and business owners, the stakes are high, and mistakes can cost thousands or delay probate for months. That’s where a professional Inheritance Tax (IHT) accountant comes in, acting like a guide through the tax jungle. This final part dives into how an expert, like those at My Tax Accountant (https://www.mytaxaccountant.co.uk/inheritance-tax), can make the process smoother, more accurate, and potentially save you a fortune. We’ll wrap up with a detailed case study based on a real-life scenario to show you exactly how this works. Stick with me—this is where it gets practical.
Why You Might Need an IHT Accountant
Let’s face it: IHT400 is not a form you want to mess up. Between valuing complex assets, claiming reliefs, and meeting HMRC’s deadlines, there’s a lot of room for error. An IHT accountant brings expertise that can save you time, stress, and money. They know the ins and outs of HMRC’s rules, spot opportunities for reliefs like Business Property Relief (BPR) or Residence Nil Rate Band (RNRB), and ensure your calculations are watertight. In 2023-2024, HMRC issued penalties totalling £200 million for IHT errors, often due to incorrect valuations or missed reliefs (source: HMRC Compliance Report 2024). A good accountant helps you avoid becoming part of that statistic.
For business owners, the benefits are even bigger. Valuing a family business or claiming BPR requires specialist knowledge—get it wrong, and you could lose out on 50% or 100% tax relief. An accountant can also handle disputes with HMRC, negotiate instalment plans, or even uncover exemptions you didn’t know existed. Plus, they’ll keep you compliant with the latest rules, like the updated IHT400 guidance for 2025 (source: GOV.UK, IHT400 Notes, April 2025).
What Does an IHT Accountant Do?
So, what exactly does an accountant bring to the table? Here’s a rundown:
Accurate Valuations: They work with professional valuers to assess assets like property, businesses, or unquoted shares, ensuring HMRC accepts your figures.
Relief Optimization: They identify every possible exemption or relief, such as BPR, APR, or charity exemptions, to minimize the tax bill.
Form Completion: They complete IHT400 and its schedules (e.g., IHT413 for businesses, IHT403 for gifts) with precision, reducing the risk of HMRC queries.
Payment Planning: They advise on instalment options or grants on credit to manage cashflow, especially for cash-poor estates.
Dispute Resolution: If HMRC challenges your submission, they negotiate on your behalf, backed by evidence like valuations or legal documents.
Probate Support: They liaise with HMRC to secure the probate code, speeding up the process.
For example, a business owner with a £1 million estate could save £200,000 by claiming 100% BPR on a £500,000 business, but only if the accountant proves it’s a trading entity. In 2024, 15% of BPR claims were initially rejected due to poor documentation (source: HMRC BPR Statistics 2024)—an accountant prevents that.
Case Study: The Patel Family Estate
Now, consider this: Let’s walk through a real-world-inspired case study to see how an IHT accountant makes a difference. Meet the Patel family from Birmingham. In January 2025, Mrs. Anjali Patel, aged 68, passed away, leaving a complex estate. Her executor, her son Vikram, turned to My Tax Accountant for help. Here’s the breakdown of Anjali’s estate and how the accountant saved the day.
Estate Details
Assets:
Family home: £700,000 (to be left to Vikram and his sister, Meera).
Convenience store (sole trader): £300,000.
Savings and investments: £150,000.
Gifts: £30,000 to Meera three years ago, exceeding the £3,000 annual exemption.
Liabilities: £200,000 mortgage, £7,000 funeral costs.
Total Gross Value: £700,000 + £300,000 + £150,000 + £30,000 = £1,180,000.
Net Value (before reliefs): £1,180,000 - £207,000 = £973,000.
Vikram, a busy IT consultant, was overwhelmed by IHT400’s complexity and the tight six-month deadline to pay any tax (by 31 July 2025). He also worried about selling the store to cover a potential tax bill, as it was the family’s livelihood.
Step 1: Initial Consultation
Vikram contacted Mr. Maz, CEO of My Tax Accountant, for a free initial consultation. Maz reviewed Anjali’s will, asset documents, and gift records. He flagged that the estate exceeded the £325,000 nil-rate band, requiring IHT400, and identified potential reliefs: RNRB (since the home went to direct descendants) and BPR (for the store).
Step 2: Valuations and Reliefs
Maz worked with a chartered valuer to confirm the store’s £300,000 value, ensuring it qualified as a trading business for 100% BPR. He also verified the home’s £700,000 valuation through a local surveyor, avoiding an HMRC challenge. The £30,000 gift, made three years ago, qualified for 20% taper relief (taxed at 32% on £27,000 after the £3,000 exemption).
Calculations:
Reliefs:
Nil-Rate Band: £325,000.
RNRB: £175,000 (home to children).
BPR: £300,000 (100% relief on store).
Total Reliefs: £325,000 + £175,000 + £300,000 = £800,000.
Taxable Value: £973,000 - £800,000 = £173,000.
Gift Tax: £27,000 × 32% (taper relief) = £8,640.
Main Estate Tax: (£173,000 - £27,000) × 40% = £58,400.
Total IHT: £58,400 + £8,640 = £67,040.
Without Maz’s help, Vikram might have missed BPR, adding £120,000 to the tax bill (40% of £300,000).
Step 3: Completing IHT400
Maz completed IHT400 and schedules IHT405 (home), IHT413 (store), and IHT403 (gift), ensuring all valuations were backed by documentation. He used TaxCalc software to cross-check calculations, avoiding errors. The form was submitted to HMRC in April 2025, well within the 12-month deadline.
Step 4: Payment Strategy
The estate’s savings (£150,000) could cover the £67,040 tax, but Vikram wanted to preserve cash for the store’s operations. Maz applied for instalments on the £58,400 house-related tax via IHT420, setting up £5,840 annual payments over 10 years at 0% interest. The £8,640 gift tax was paid upfront by 31 July 2025, avoiding 7.75% interest (source: GOV.UK, IHT Rates, April 2025).
Step 5: HMRC Query and Resolution
HMRC queried the store’s BPR eligibility, suspecting it included some investment activity (e.g., renting out part of the premises). Maz provided detailed accounts showing 90% of revenue came from trading, securing full BPR. This saved £120,000 and earned HMRC’s approval within 30 days, with the probate code issued promptly.
Outcome
Vikram paid £67,040 in IHT instead of a potential £187,040 without BPR. The store remained operational, and probate was granted by June 2025, allowing Vikram and Meera to inherit the home and business without forced sales. Maz’s expertise saved £120,000 and months of stress, proving the value of professional help.
Table 4: Patel Family Estate IHT Summary
Component | Amount | Details |
Gross Estate Value | £1,180,000 | Home, store, savings, gift |
Liabilities | £207,000 | Mortgage, funeral costs |
Net Estate Value | £973,000 | After liabilities |
Reliefs/Exemptions | £800,000 | Nil-Rate Band (£325,000), RNRB (£175,000), BPR (£300,000) |
Taxable Value | £173,000 | After reliefs |
IHT Due | £67,040 | £58,400 (main estate) + £8,640 (gift with taper) |
Savings from BPR | £120,000 | 100% relief on store’s £300,000 value |
Source: Hypothetical case study, aligned with HMRC IHT rules, April 2025
Why Choose My Tax Accountant?
None of us wants to navigate IHT400 alone, especially with a business or complex assets involved. My Tax Accountant, led by Mr. Maz, offers tailored IHT expertise for UK taxpayers and business owners. They handle everything from valuations to HMRC negotiations, ensuring you maximize reliefs and meet deadlines. Their client-focused approach, backed by years of experience, makes them a trusted partner for estates like Anjali’s.
Get Help Today
So, the question is: Ready to tackle IHT400 with confidence? Whether you’re an executor, beneficiary, or business owner, My Tax Accountant can save you time, money, and stress. Contact Mr. Maz for a free initial consultation at https://www.mytaxaccountant.co.uk/inheritance-tax or call their team directly. Don’t let IHT catch you off guard—get expert help to secure your family’s future.
What is the Difference Between IHT400 and IHT205?
Purpose of the Forms
The IHT400 and IHT205 forms serve similar but distinct purposes in the context of Inheritance Tax in the UK. The IHT400 is a comprehensive form used to report the value of an estate for Inheritance Tax purposes and is generally required when the estate is complex or the Inheritance Tax is due. On the other hand, the IHT205 form is used for smaller, simpler estates and is often referred to as the "short form." It's primarily used when there is no Inheritance Tax due and the estate doesn't involve complex assets.
Complexity and Length
The IHT400 is a much more detailed and lengthy form compared to the IHT205. It consists of multiple sections that cover various types of assets, liabilities, gifts, and other financial details. The IHT205 is a shorter form that usually spans a few pages and only asks for basic information about the deceased's assets and liabilities.
Who Should Fill Them Out?
The IHT400 is typically filled out by the executor or administrator of the estate, often with the assistance of legal or financial advisors due to its complexity. The IHT205 can usually be filled out by the executor or a close family member without the need for professional assistance, given its simpler nature.
Asset Types and Valuations
The IHT400 requires detailed valuations of all types of assets, including real estate, stocks, business interests, and even overseas assets. It also requires information about any gifts made by the deceased in the seven years before death. The IHT205 is less stringent about valuations and usually doesn't require detailed information about gifts unless they are significant enough to affect the Inheritance Tax calculation.
Inheritance Tax Calculations
The IHT400 form is used to calculate the exact amount of Inheritance Tax due and provides options for claiming various reliefs and exemptions. The IHT205 form is generally used when it's already clear that no Inheritance Tax is due, so it doesn't include detailed tax calculations.
Probate Requirements
Both forms are used as part of the probate process, but the IHT400 is often required when applying for a "grant of representation," which gives the legal right to administer the estate. The IHT205 is usually sufficient for simpler estates where a "grant of probate" or "letters of administration" is required.
Timeframes and Deadlines
Both forms have deadlines, but the IHT400 is more stringent due to its complexity and the potential tax liabilities involved. It must be submitted within 12 months of the death, and the tax must be paid within six months. The IHT205 has more flexible deadlines, especially when no tax is due.
Penalties and Amendments
Filling out the IHT400 incorrectly can result in significant penalties, including fines and potential legal action. Therefore, it's crucial to double-check all entries and consult with professionals if needed. The IHT205 is more forgiving of mistakes, but it's still essential to be as accurate as possible to avoid complications.
Professional Assistance
Given the complexities involved in filling out the IHT400, it's often advisable to seek professional help, such as an Inheritance Tax Accountant or a solicitor. The IHT205, being a simpler form, usually doesn't require professional assistance unless the executor is unfamiliar with the probate process or there are specific legal questions.
Conclusion
The IHT400 and IHT205 forms are both essential tools in the estate administration process in the UK, but they serve different needs and complexities. Understanding the key differences between these two forms is crucial for anyone involved in administering an estate. From the level of detail required to the potential tax implications and legal requirements, each form has its own set of rules and guidelines that must be carefully followed. Therefore, choosing the correct form to fill out is the first crucial step in ensuring a smooth and legally compliant estate administration process.
Do You Need to Complete IHT400 to Claim RNRB in the UK?
Understanding RNRB
The Residence Nil Rate Band (RNRB) is a tax relief in the UK that allows for a portion of the estate to be passed on to direct descendants free of Inheritance Tax. This relief is specifically for the family home and is in addition to the standard Nil Rate Band. The RNRB can significantly reduce the Inheritance Tax liability on an estate, making it a crucial consideration in estate planning and administration.
Claiming RNRB: The Necessity of IHT400
To claim the Residence Nil Rate Band, you will generally need to complete the IHT400 form. The IHT400 is a comprehensive form that provides HM Revenue and Customs (HMRC) with detailed information about the deceased's estate, including assets, liabilities, and any reliefs or exemptions being claimed, such as the RNRB. The form includes specific sections where you can indicate that you are claiming the RNRB, and you'll need to provide details about the property and the beneficiaries to substantiate your claim.
Why Not IHT205?
The shorter IHT205 form is generally used for simpler estates where no Inheritance Tax is due, and it doesn't provide the level of detail required to claim reliefs like the RNRB. If you are administering an estate where the RNRB could be applicable, you'll almost certainly need to use the IHT400 form to ensure you can claim this valuable relief.
Required Information for RNRB
When completing the IHT400 to claim the RNRB, you'll need to provide specific information, such as the property's address, its valuation, and details about who will inherit it. You'll also need to confirm that the property was the deceased's residence and that it will pass to direct descendants, like children or grandchildren.
Professional Help for Complex Cases
Claiming the RNRB can be complex, especially if the estate includes multiple properties, or if the family home is part of a trust. In such cases, it's often advisable to seek professional help from an Inheritance Tax Accountant or a solicitor experienced in estate administration. They can guide you through the intricacies of the IHT400 form and ensure that you maximize the RNRB relief.
Mistakes and Amendments
If you make a mistake in claiming the RNRB on the IHT400 form, it can result in financial penalties or the relief being denied. Therefore, it's crucial to double-check all entries related to the RNRB and consult with professionals if you're unsure. If you discover a mistake after submitting the form, you'll need to submit a corrective account to HMRC.
Conclusion
In summary, if you're administering an estate in the UK and wish to claim the Residence Nil Rate Band, you will need to complete the IHT400 form. This comprehensive form allows you to provide all the necessary details to claim the RNRB and can help you significantly reduce the estate's Inheritance Tax liability. Given the complexities involved, especially for larger or more complicated estates, professional advice is often recommended to ensure that you are fully compliant with the law and that you maximize the available reliefs.
Summary of All the Most Important Points
HMRC Form IHT400 must be completed for estates with Inheritance Tax (IHT) due or those not qualifying as excepted estates, submitted within 12 months of death, with tax paid within six months to avoid 7.75% interest (April 2025 rate).
Gather all relevant documents, including the death certificate, will, asset valuations, liabilities, and gift records for the past seven years, before starting IHT400.
Accurate valuation of assets like property, businesses, and gifts is crucial, using professional valuers to avoid HMRC disputes, which affected 10% of IHT400 submissions in 2024.
The nil-rate band (£325,000) and Residence Nil Rate Band (RNRB, up to £175,000) reduce the taxable estate, with a 40% tax rate (or 36% if 10% is donated to charity) applied to the excess.
Business Property Relief (BPR) can exempt 50% or 100% of business assets, but requires proof of trading activity, with 12% of claims rejected in 2023-2024 due to misclassification.
Gifts made within seven years of death may be taxed, with taper relief reducing the rate (e.g., 24% for gifts 4-5 years prior), as seen in Idris’s £50,000 gift example.
IHT can be paid in 10 annual instalments at 0% interest for assets like property or businesses, easing cashflow, as used by 18% of estates in 2023-2024.
Common disputes with HMRC involve asset valuations, BPR eligibility, or gift reporting, resolvable with evidence like professional valuations or business accounts.
An IHT accountant, like My Tax Accountant, can maximize reliefs, ensure accurate valuations, and handle HMRC queries, potentially saving significant tax, as in the Patel case (£120,000 saved).
Use HMRC’s online IHT calculator and tools like TaxCalc to verify calculations, and contact the IHT helpline (0300 123 1072) for guidance, ensuring compliance and accuracy.
FAQs
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About the Author
Mr. Maz Zaheer, FCA, AFA, MAAT, MBA, is the CEO and Chief Accountant of My Tax Accountant and Total Tax Accountants—two of the UK’s leading tax advisory firms. With over 14 years of hands-on experience in UK taxation, Maz is a seasoned expert in advising individuals, SMEs, and corporations on complex tax matters. A Fellow Chartered Accountant and a prolific tax writer, he is widely respected for simplifying intricate tax concepts through his popular articles. His professional insights empower UK taxpayers to navigate their financial obligations with clarity and confidence.
Disclaimer:
The information provided in our articles is for general informational purposes only and is not intended as professional advice. While we strive to keep the information up-to-date and correct, My Tax Accountant makes no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the website or the information, products, services, or related graphics contained in the articles for any purpose. Any reliance you place on such information is therefore strictly at your own risk. The graphs may also not be 100% reliable.
We encourage all readers to consult with a qualified professional before making any decisions based on the information provided. The tax and accounting rules in the UK are subject to change and can vary depending on individual circumstances. Therefore, My Tax Accountant cannot be held liable for any errors, omissions, or inaccuracies published. The firm is not responsible for any losses, injuries, or damages arising from the display or use of this information.
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