Inheritance tax is becoming a bigger issue for more families across the UK. HMRC collected £8.2 billion in inheritance tax receipts in the 2024/25 financial year, a new record, with the Office for Budget Responsibility forecasting this could rise to £9.1 billion for 2025/26.
Rising property values and frozen tax-free thresholds mean more estates are now being pulled into scope, and that trend is set to continue. When someone dies, and their estate may be subject to inheritance tax, the IHT400 is the form that needs to be completed and sent to HMRC.
It covers everything from valuing assets to claiming reliefs. Here, we will explain what the form involves, when it applies, and what to expect at each stage of the process.
The IHT400 is the main form used to report a deceased person's estate to HMRC when inheritance tax may be due. It is completed by the personal representatives of the estate, which usually means the executors named in the will. You need to submit this form as part of the probate process, and you cannot start distributing the estate until HMRC has processed it.
You need to complete the IHT400 if:
Under current UK tax rules, inheritance tax is charged at 40% on the value of an estate above £325,000. This is called the nil-rate band. There is also an extra allowance of up to £175,000 called the residence nil-rate band, which applies when the family home is passed to direct descendants.
It is also worth knowing that from January 2022, HMRC removed the simpler IHT205 form for most estates in England and Wales. This means more families now need to complete the full IHT400, even when little or no tax is owed.
If you are dealing with a complex or high-value estate, ETC Tax’s private client tax team can guide you through every stage of the process. If the estate includes property, our property tax specialists can also help with reporting.
The IHT400 is a detailed form that covers every part of a deceased person's finances. It is made up of a main form and a set of numbered supplementary schedules. Each schedule covers a different type of asset or situation. You need to identify which schedules apply to the estate you are dealing with and complete them alongside the main form.
The main form asks for:
Each schedule has its own number. For example:
HMRC requires that you submit the IHT400 within 12 months of the person dying and before applying for probate. Gathering all the supporting documents before you start will help avoid delays.
Our private client tax team works with families across the UK to identify the correct schedules and complete the IHT400 accurately. If the estate involves overseas assets or complex structures, it is worth getting professional support early.
Valuing an estate correctly is one of the most important parts of completing the IHT400 form guide process. HMRC requires that all assets be valued at their open market value on the date of death. This is the price that a willing buyer and seller would agree on.
For residential and commercial property, you normally need a professional valuation from a qualified surveyor or estate agent.
For shares listed on the London Stock Exchange, HMRC uses a method called the quarter-up rule. This takes the lower of two share prices on the date of death and adds a quarter of the difference between them.
These often need specialist valuations. HMRC looks at these very carefully, so it is important to get independent professional advice.
You can estimate the value of cheaper assets, such as electrical items and ordinary household goods, but for items like cars, jewellery, and paintings, HMRC expects you to work out how much you would have received if they had been sold.
Debts and liabilities can reduce the taxable value of the estate. These include:
However, HMRC has strict rules about which debts can be deducted. If a debt was used to buy something that is already exempt from inheritance tax, it generally cannot be used to reduce the taxable part of the estate.
If the estate includes property assets, our property tax team can help and make sure everything is reported correctly to HMRC. For guidance on HMRC's valuation requirements, you can also refer to the official GOV.UK guidance on valuing an estate.
If any disputes arise with HMRC over reported values, our tax disputes and investigations team can help you handle them.
Several reliefs and exemptions under UK inheritance tax rules can reduce the amount of tax owed on an estate. Personal representatives need to identify which ones apply and claim them correctly on the IHT400, usually using the relevant supplementary schedules.
Business Relief and Agricultural Relief are particularly valuable but also complex. HMRC applies strict conditions, and errors in these claims can lead to investigations or delays.
Our private client tax team helps families identify every relief they qualify for and makes sure the claims are completed correctly. For cases involving business assets, our corporate and business tax specialists can also provide additional support.
Once the IHT400 and all supporting schedules are complete, they must be posted to HMRC's Inheritance Tax office. You cannot submit the form online. Along with the form, you will need to include any relevant supplementary schedules and supporting documents, such as property valuations and bank statements.
You must pay inheritance tax by the end of the sixth month after the person died to avoid paying interest. For example, if the person died in January, payment must be made by 31 July.
In some cases, such as when the estate includes property or business assets that may take time to sell, you can apply to pay the tax in annual instalments over ten years. Interest will still apply in most cases.
Most payments are made by bank transfer. There is also a scheme where participating banks and building societies can release funds directly from the deceased's accounts to HMRC to cover the inheritance tax before probate is granted.
After HMRC processes the IHT400, they issue a unique reference code. You will usually receive this within 20 working days of HMRC receiving your IHT400 or inheritance tax payment, whichever is later. You need this code to apply for probate in England and Wales.
For full guidance on submission and payment, refer to the HMRC page on valuing an estate and paying inheritance tax.
If you are unsure about the process or need help preparing the submission, our private client tax team can manage this on your behalf.
Once HMRC receives your IHT400, they will review the information and either accept it as filed or raise queries. In simpler cases, HMRC will respond relatively quickly. For larger or more complex estates, particularly those involving trusts, overseas assets, or business property, the process can take longer.
Occasionally, HMRC may carry out further checks on the information provided, known as a compliance check. This may include the Valuation Office or the Shares and Asset Valuation team checking any valuations. If you have not heard from HMRC 14 weeks after submitting your IHT400 form, no further checks will be carried out.
If HMRC does raise a compliance check, personal representatives may need to provide additional valuations or documents. Having a tax adviser involved from the start can help speed up this process considerably.
If HMRC raises a formal dispute or opens an investigation, you will need professional support to respond effectively. Our tax disputes and investigations team represents personal representatives in dealings with HMRC and helps resolve matters as efficiently as possible.
For general information on how HMRC handles inheritance tax queries, you can also visit the HMRC Inheritance Tax general enquiries page.
Filing the IHT400 takes time, and small mistakes can cost the estate money. A missed relief or an incorrect valuation can lead to a bigger tax bill or delays in distributing the estate to the people who should receive it.
ETC Tax works with families across the UK to make this process easier. Our private client tax team helps personal representatives value estates correctly, claim every relief available, and submit the IHT400 accurately to HMRC. If the estate includes property, our property tax specialists can support with reporting.
If HMRC raises a query or opens a compliance check, our tax disputes and investigations team can step in and handle it for you.
Contact ETC Tax today to get the right support from the start.
