The IHT400 is the main form used when HMRC needs full details of an estate.
Fewer than 1 in 10 estates need to complete the IHT400 form. Around half of those estates actually have to pay Inheritance Tax. So needing the form doesn’t always mean there’s tax to pay.
For most scenarios, you can use our IHT400 Checker Tool to find out if you need to use this form.
What comes before this
When you don’t need to use the IHT400 form
You don’t normally need to complete the IHT400 form if the estate is an ‘excepted estate’.
What is an ‘excepted estate’?
An excepted estate is one that doesn’t need to pay Inheritance Tax or report full details to HMRC.
To be classed as excepted, the estate must meet one of the conditions below, and none of HMRC’s extra reporting rules must apply.
All thresholds are based on the gross value of the estate for Inheritance Tax purposes, not the value used for Confirmation.
Most estates in Scotland are excepted. There are three main ways an estate can qualify:
The estate is worth less than £325,000 in total (based on gross value for tax purposes).
The estate is worth up to £3 million, and everything above £325,000 is left to a surviving spouse or legal civil partner, a registered UK charity, or a combination of both.
The estate is worth up to £650,000 and the deceased was widowed, having inherited the full tax allowance from their spouse (known as the ‘transferable nil rate band’). The full tax allowance will only have been inherited if the person’s spouse left their whole estate to them, a registered UK charity, or a combination of both.
If the estate meets none of these conditions, it is definitely not excepted.
If it meets one of these conditions, you need to check whether any of the additional HMRC reporting rules below apply to see if it’s excepted.
When you need to use the IHT400 form
Here are the most common reasons you would need to use the IHT400. Even if no Inheritance Tax is due, you might still need to complete the IHT forms if you are claiming certain exemptions, or the estate includes things HMRC wants to review more closely.
Some of these things can get quite technical - we can help you with this as part of our service.
1. Tax is payable
If Inheritance Tax is due on the estate, you will always need to complete the IHT400, regardless of any exemptions.
2. You’re claiming exemptions to avoid paying tax
You need to submit the IHT400 if you’re relying on any of the following exemptions to reduce the tax bill.
Residence Nil Rate Band (also called the ‘residence allowance’)
If a home is being left to the person’s children or grandchildren, of any age (including stepchildren or foster children), you might be able to claim an extra allowance of up to £175,000. This is called the ‘residence allowance’. You’ll need to complete the IHT400 form to claim it, even if no tax is due.
This can be doubled to £350,000 if using two deceased spouses’ allowances. This gives a potential £1 million threshold if both spouses’ personal £325,000 allowances are also available.
This exemption also applies to homes someone sold before they died, but on or after 8 July 2015. HMRC refers to this as the ‘downsizing’.
Transferring part of a spouse’s unused tax allowance
If the deceased person was widowed and didn’t inherit their spouse’s full estate, only part of their £325,000 allowance can be transferred. If the full allowance isn’t available, you always need to use the IHT400 to claim it, even if you don’t need the full amount.
Claiming reliefs for certain types of business assets, shares, or agricultural land
Some assets are tax-free or partly tax-free, but still need to be declared in full to claim the exemptions. This includes:
shares in unlisted companies (including AIM-listed)
land or property used in a business
family businesses or partnerships
agricultural land or property that qualifies for Agricultural Property Relief (APR)
other business assets that may qualify for Business Property Relief (BPR)
Even if these reduce the tax bill to zero, HMRC still needs the full details in the IHT400.
3. HMRC requires full reporting for other reasons
Even if you’re not claiming exemptions and no tax is due, you might still need to use the IHT400 if:
the deceased person gave away their home but continued to live in it rent-free
the estate includes foreign assets worth more than £100,000
the estate is worth more than £3 million, even if left to a spouse or charity
the deceased made gifts in the 7 years before death that total more than £250,000
there are complex trusts or other arrangements that HMRC needs to assess
Our Tax Forms Service is well suited for scenarios 2 and 3. If you’re paying tax (scenario 1), we can still help you with Confirmation but you should get in touch with us to discuss how this works.
Use our Smart Estate Assessment Tool to get qualified for the service
Time limits with the IHT400 form
If you need to submit an IHT400, you need to do this before you can apply for Confirmation. You’ll need to send an unsigned copy of your C1 (Confirmation) form along with the IHT400, so it’s best to start preparing both at the same time.
HMRC will start to charge interest on any Inheritance Tax due 6 months after the person died. This means it’s often best to submit the IHT400 form as soon as you can. It’s okay to estimate the value of any assets that are difficult to value and then submit a correction to HMRC at a later date.
You can also pay some or all of your Inheritance Tax before you submit the forms. If you pay too much, you can get a refund later.
If you need to pay Inheritance Tax
If you need to pay Inheritance Tax, you only pay this on the amount over the threshold, taking away any money left to a spouse or a registered charity.
The standard Inheritance tax rate is 40%. However, you only need to pay 36% if the person left 10% or more of the total estate value to a registered charity.
For example:
someone dies with a total estate value of £500,000
they leave £90,000 to their spouse and £10,000 to charity (total: £100,000)
the remainder - £400,000 - if the amount that would have the tax threshold applied to it.
If the relevant threshold is £325,000, that makes the taxable amount £75,000
Only 2% was left to charity, so the tax rate is 40%
So the total amount of tax payable is £30,000
Here are some more examples of how much Inheritance Tax would be payable in an estate.
Inheritance Tax examples
| Example 1 | Example 2 | Example 3 | Example 4 |
Total estate value | £600,000 | £600,000 | £1 million | £1 million |
Amount left to spouse | £100,000 | £40,000 | Nothing | £100,000 |
Amount left to charity | Nothing | £60,000 (10%) | £75,000 (7.5%) | £100,000 (10%) |
Remainder | £500,000 | £500,000 | £925,000 | £800,000 |
Tax-free threshold | £325,000 | £325,000 | £650,000 | £500,000 |
Taxable amount | £175,000 | £175,000 | £275,000 | £300,000 |
Tax rate | 40% | 36% | 40% | 36% |
Tax payable | £70,000 | £63,000 | £110,000 | £108,000 |
How and when to pay Inheritance Tax
You need to pay Inheritance Tax within six months after the end of the month the person dies in. After that, HMRC will start charging interest. However, if you need time to sell property or other assets, you can usually agree an installment plan.
Before you can pay Inheritance Tax, you need to get an Inheritance Tax reference number.
You should apply for this at least 3 weeks before making a payment. You can apply online, or using a paper form.
Once you have your Inheritance Tax reference number, there are various ways to pay, including paying from:
the deceased person’s bank or investment account
the deceased person’s NS&I bonds or government stock
your own bank account
IHT loans, available from specialist brokers
If you pay the Inheritance Tax from your own account, you can claim it back from the deceased person’s estate when you have access to enough money from that estate.
Need help completing the tax forms?
If you need to complete the IHT400 form, we can help.
We can help you complete the tax forms
If you don’t need to pay Inheritance Tax, you can get all the expert support you need for this and Confirmation at an affordable price with our ‘Tax Forms’ package.
If you do need to pay Inheritance Tax, we can still help with the Confirmation side, and can put you in touch with a tax expert who can help. Contact us today.