Inheritance Tax Returns
IHT return
Are you looking for help with your Inheritance Tax Return?
“The ‘approachable, friendly and motivated’ team receives a steady flow of instructions from high-net-worth individuals and families on an array of tax planning, wealth preservation, estate and succession planning issues.”
“I have found her to be extremely efficient, She is very fair in her dealings with all parties and she navigates the conflicting demands imposed on her by opposing parties in a supremely fair fashion.”
If you are responsible for delivering an inheritance tax account you have a legal duty to:
- Deliver the account within the time allowed;
- Provide a corrective account and corrected information and documents;
- Tell HMRC without unreasonable delay if you find out that any account, information or document is incorrect to minimise liability for penalties.
Table of Contents
Inheritance tax and interest
To comply with HMRC requirements, the IHT400 must be lodged with HMRC within 12 months of the date of death. HMRC’s Inheritance Tax Toolkit is intended to identify common areas of risk in connection with the completion of the IHT400 and identifies for main areas of risk:
- Valuations
- Omissions
- Using out-of-date law
- Inadequate record keeping.
What is Inheritance Tax?
Inheritance tax (IHT) is a tax paid on someone’s estate when they die. The standard rate of Inheritance Tax is 40%. However, the amount of tax you pay depends on the value of the estate and the relationship between the deceased and the beneficiaries. Understanding inheritance tax is key to effective estate planning.
How do you value the estate?
To value an estate, you will need to:
- List all the assets in the estate. This includes the deceased’s home, property, possessions, cars, money, investments, bank accounts, insurance policies and businesses.
- Calculate the value of the assets.
- Deduct any money the deceased person owes such as mortgages or credit card bills.
It’s important to keep proper records of how you worked out the valuation so you can justify it to HM Revenue and Customs. HMRC can inspect records up to 20 years after IHT is paid.
Valuing the assets can be complicated. You will need to take professional advice in most instances, such as an estate agent’s valuation of a home or an appraiser’s valuation of jewellery. The valuation process can take several months if it’s a large or complicated estate.
Who pays Inheritance Tax?
The person dealing with the estate is responsible for paying Inheritance Tax to HM Revenue and Customs. This person is called an executor if the person who died left a will and an administrator if they did not. They will use funds from the estate to pay the tax bill, such as money in the deceased’s bank account. Or they will raise money by selling assets.
When the debts and taxes are paid, the executor or administrator can distribute what remains of the estate. Beneficiaries do not normally pay Inheritance Tax on the things they inherit.
How much can you inherit before paying inheritance tax?
Inheritance tax is only payable on estates worth more than a certain amount. This is known as the ‘threshold.’ The current threshold is £325,000. There is normally no IHT to pay if the estate is worth less than this amount.
There is also no tax to be paid if the person who dies leaves everything above the threshold to a spouse or civil partner, or to an exempt beneficiary like a charity. Currently, only 1 in 20 estates in the UK pay Inheritance Tax.
Everything above the threshold is subject to IHT at a rate of 40%. So, if an estate is worth £600,000, tax will be charged £275,000. The tax would be £110,000 (40% of £275,000).
If the deceased leaves home to their children or grandchildren, then the threshold is increased by £175,000 to £500,000. The increased threshold applies to estates worth less than £2 million.
When do you have to pay Inheritance Tax?
The deadline for paying IHT is the end of the sixth month after the person’s death. If IHT is not paid by then, HMRC will start to charge interest. You can use ballpark valuations and make a payment on account to HMRC if the estate has not been fully valued by the due date.
It’s possible to pay the tax in instalments for certain assets that are hard to sell, such as a home. However, interest will still be charged on the outstanding amount.
Are there any reliefs and exemptions for Inheritance Tax?
Gifts made during the person’s lifetime will be IHT-free if the deceased lives for more than seven years after making the gift. If they die within seven years, the gift may be chargeable to IHT but potentially at a lower rate. The rate depends on when the gift was given and to whom.
Gifts made to a spouse or civil partner, either during a lifetime or on death, are exempt from IHT as long as the spouse or civil partner lives in the UK. Gifts to charities and UK political parties are also normally IHT-free. You can also take advantage of various other gifting exemptions. For example, small gifts up to £3,000 a year and some wedding gifts are not charged to IHT.
- See our blog post Gifting Property to Children
Some types of assets get special relief from IHT. These mainly affect business or agricultural assets. It’s a good idea to consult a solicitor if you own these types of assets.
How can I reduce the amount of Inheritance Tax I pay?
There are a few things you can do to reduce the amount of IHT that’s due. These include:
- Leaving the estate to a spouse or civil partner
- Leaving your home to a spouse, child or grandchild
- Leaving a legacy to charity
- Regularly giving away £3,000 a year in gifts
- Putting your assets into a trust for your beneficiaries.
Some of these strategies are more complicated than others, and everyone’s financial situation is different. A solicitor can help you put the proper strategies in place to reduce the amount of IHT that’s due when you die.
What is an IHT400 form?
An IHT400 form is a tax return that must be sent to HM Revenue & Customs (HMRC) within 12 months of the date of death. The IHT400 form is used to calculate the amount of Inheritance Tax that is due on the estate.
Who should complete IHT400?
The executor or administrator of the estate completes form IHT 400 and is responsible for paying any taxes that are due. They will need to do this before making the probate application.
What are some common errors when filling out IHT400 forms?
The IHT400 form is used to report certain gifts made during the deceased person’s lifetime and the value of the estate upon death. This is a long and complex form, and it is important to accurately fill out this form in order to avoid any errors that could result in delays or penalties.
Some of the biggest errors made when filling out IHT400 forms include:
- Failing to apply for an Inheritance Tax reference number before sending form IHT400 to HMRC
- Items missing from the deceased’s assets
- Using an improper method for valuing assets
- Not including official date-of-death valuations from the correct organisations
- Confusing wholly owned versus jointly owned assets, or failing to calculate the deceased’s share of jointly-owned assets
- Failing to list exemptions and reliefs (which can result in too much tax being paid)
- Failing to send the proper documents.
If you are unsure about how to fill in Form IHT 400 or which documents to include, you can speak to a solicitor or contact the Probate Registry for advice. By ensuring that you have all the necessary documents, you can help to make the probate process as smooth and straightforward as possible.
The UK Care Guide explains inheritance tax planning trusts which can be set up to manage what will happen to your estate after you pass away.
To discuss your IHT return with our specialist inheritance tax lawyers:
- Call 020 7485 8811, or
- Complete our online enquiry form.
Further reading:
Speak to an Inheritance Tax Planning solicitor
For a free initial conversation call 020 7485 8811
Email us Send us an email and we’ll get back to you
With a deep sense of gratitude, I want to thank you all for your diligent and comprehensive contributions and assistance in my legal travails.
I am sure you know how stressful legal proceedings can be for everyday laypersons like myself. Thankfully, you have been a bastion of support and reassurance during these trying months, and I struggle to find the right words to express my sincere gratitude.
Thank you from the bottom of my heart.
A private client team offering a range of services to assist with private client matters including trust and probate services. A friendly approach with a keen eye for detail.
I have been a client of this firm for a number of years and been impressed by particular individuals, the care and thoughtfulness with which they have worked.
An efficient firm which provides an excellent service at highly competitive charging rates.
The team receives a steady flow of instructions from high-net-worth individuals and families on an array of tax planning, wealth preservation, estate and succession planning issues
I think this firm has excellent strength and depth in this area, for both contentious and non-contentious work, and they can hold their own against any other firm.
I have found them to be incredibly knowledgeable and pragmatic in settling claims for their clients.
The contested estates team is strong with talented young solicitors doing good quality work
The nimble team acts for a broad range of high-net-worth individuals and families on a variety of complex estate and trust litigation.
Osbornes has a ‘strong private client department’ and ‘the firm seems to be going from strength to strength’.
Thank you for managing my case, following a complete fiasco before I contacted Osbornes Law. I know that the work involved was rather complicated, possibly frustrating and often time consuming. I was impressed with your current knowledge of the case when we had the first meeting at your office. I regard a face-to-face meeting as imperative in developing positive relationships. Members of your team, such as Alex and Ella were impressive too, with their efficient, friendly manner of working.
I am grateful for your patience, advice and excellent support at a difficult time. Hopefully it won't be necessary to contact you again regarding this matter! I will definitely use Osbornes Law in the future."Commitment to the cause, willingness to go the extra mile and complete command of the area mean they always give the right advice and do the best job possible."
"They are completely committed to doing the absolute best they can for every single client. They are bright, knowledgeable and innovative."
"This team perhaps does not have the reputation in this area it ought to have. It quietly handles some very big, high profile disputes. It has an expert team to do so and provides sensible pragmatic advice to its clients."
"The agile team at Osbornes acts for a wide range of high-net-worth individuals and families in complex estate and trust litigation, advising on a wide array of contentious trust and estate matters."
"I wish to thank you for your advice, efficiency and professionalism throughout which has been greatly appreciated."
"I am proud to be a private client of Osbornes Solicitors LLP, a client of many years. I appreciate the swift and efficient work of the Private Client Department Team."
"Jan Atkinson, with her steely, steady, calming presence, instils confidence in the most highly-strung of us clients. With her masterful knowledge of the law, old and new, and its application, Jan can navigate through the most complex of cases to a successful end."
"I find Osbornes’ client-friendly approach welcoming and refreshing"
"A medium-sized London firm dealing with big litigation and doing it extremely well because of a depth of expertise and experience."
My family had the pleasure of Jan Atkinson working with us on the will and probate issues of [my mother's] estate in Camden and Ireland after she passed on last year. Jan and her assistant(s) offered us a fantastic service at a sad time.
"Jan Atkinson stands out for her wide-ranging knowledge and experience of estates; whatever problem you throw at her, she has seen it all before and is able to find a creative and sustainable solution. She has exceptional commitment to her clients and explores every avenue to find the best solution for them"
The team is very caring, experienced and detailed and was clear about the next steps and offered very helpful advice and suggestions
Jan Atkinson has extensive experience in private client matters, which underpins her excellent skills in the contentious probate area. Plus she is strong on international matters
A small but formidable team, punching above its weight. Jan Atkinson is a seasoned pro. Approachable but no push-over
"They are an outstanding firm to work with. They are consistently impressive in their work."
"Elspeth Neilson is very reliable and practical."
"The team frequently deals with cross-border estates for high–net-worth individuals."
"The team were extremely professional in putting my needs first. There was a joined-up approach to catering for the client, and all lawyers involved were briefed and constructive."
The situation was handled by your extremely competent, efficient hands - I would not hesitate to recommend Osbornes to others.
"Service prompt and effective. I have absolute confidence in Maggie."
I am happy with the service that I got and would recommend you to other potential clients.
I found Osbornes always very helpful and efficient.
We are very pleased with the services of Osbornes. Highly professional and through with close attention to detail.
I would highly recommend Jan Atkinson in any probate matter and Osbornes Solicitors in any other legal matters.
Jan Atkinson is a very proficient lady whom I would highly recommend to anyone involved in probates.
Thanks for all your work and explaining everything so clearly. For any legal matters in the future I would not hesitate in instructing Osbornes.
We have found your service to date as the most informative we have come across.
Osbornes Solicitors always responded promptly to any request for information I had.
“Geoffrey’s affairs were dealt with just the right combination of friendliness and professionalism, which really helped.”
Jan Atkinson is confident with a straightforward approach. Her practice covers both contentious and non-contentious matters, including wealth planning and estate administration.
I would like to thank everyone in my case for the excellent job!
Accreditations
Related Content
Wills and Probate News and InsightsVIEW ALL
12.7.2024Probate Mediation
Why choose mediation for contested probate? At Osbornes, we understand that probate litigation is often highly emotive. Unfortunately, there is...
Read more
12.7.2024Is A Handwritten Will Legal?
Are hand written wills valid? It is not unusual for clients to need their will prepared and signed promptly because...
Read more- 25.4.2024
A Guide to Will Trusts
What is a trust in a will ? Setting up a trust in your will can protect assets for your loved...
Read more - 25.4.2024
A Guide to Asset Protection Trusts
One good reason to place your assets into a trust is to protect family wealth without fearing for its future....
Read more - 25.4.2024
What is a Mirror Will?
Mirror wills are mirror images of each other and practically the same in every way. They suit couples, married or...
Read more - 23.4.2024
A Guide to Life Interest Trusts
In today’s complex families, protecting assets for your children while ensuring that a surviving spouse can still enjoy them...
Read more - 23.4.2024
Discretionary Trusts
What is a discretionary trust? With a discretionary trust, there is no automatic right for beneficiaries to receive funds from...
Read more - 22.4.2024
5 Things You Should Never Put in a Will
When it comes to writing a will, you want to make sure that your wishes are known and that the...
Read more 
22.3.2024Forged Wills
If the contents of a will comes as a surprise, then one of the things to consider is whether the...
Read more- 14.2.2024
What is Proprietary Estoppel?
What is Estoppel? In general terms, estoppels operate where one party has acted on the basis of a statement made...
Read more - 14.2.2024
Duties of Trustees
What is a trustee? When someone sets up a trust, they will appoint trustees to manage the trust and its...
Read more - 3.11.2023
Deed of Variation: Making a Change to an...
What is a deed of variation? A deed of variation is a legal document which can be used to alter...
Read more - 31.10.2023
Constructive Trusts
Property rights are not always clear-cut. Sometimes, a person who does not legally own a property could be entitled to...
Read more - 17.9.2023
What is a Codicil?
What is a codicil to a will? Life has a habit of changing and your will may need to change...
Read more - 31.8.2023
Can Someone With Dementia Make A Will or...
It’s a sad reality in an ageing population that more people than ever suffer from dementia in the UK....
Read more - 31.8.2023
Can a Lasting Power of Attorney Be Challenged?
The number of people recognising the importance of making a Lasting Power of Attorney (LPA) has risen dramatically in recent...
Read more - 26.7.2023
Wills Disputes: The Duty To Account Is Not...
Beneficiaries frequently ask us whether trustees or personal representatives can be required to provide a financial account. Their request may...
Read more 
9.6.2023Will Dispute Case Law
New Births And New Relationships? Review Your Will To Avoid A Dispute You’d imagine a wealthy businessman with assets...
Read more- 9.6.2023
Of Bad Character: Undue Influence Claim Succeeds
Naidoo v Barton: undue influence and the risks of mutual wills Can someone’s bad character be used to prove...
Read more - 22.5.2023
Case Law: Dementia-Induced Mild Cognitive Impairment
Dementia is a harsh reality for increasing numbers of families. Sadly, it means the disputed wills solicitors at Osbornes Law...
Read more - 26.4.2023
German Court Rules on EU Succession Regulation
Succession laws vary from country to country which historically made the administration of cross-border estates potentially complex. Since 17 August 2015, the...
Read more - 16.3.2023
Are trusts protected from divorce?
Can trusts protect an inheritance from your spouse? A trust is a separate legal entity. Neither spouse owns its assets....
Read more - 1.3.2023
How to prevent someone contesting a will
It is fairly rare in my experience for a parent to write a child out of their will but that...
Read more - 8.2.2023
Gifting Property to Children
Can I gift property to my children? Gifting a property to your adult children is a relatively complex transaction but...
Read more
The Wills & Probate Team View the whole team
Jan Atkinson
Partner
Wills, Probate and Disputed EstatesSuzanna Baker
Partner
Wills, Probate and Disputed EstatesKatie de Swarte
Partner
Wills, Probate and Disputed EstatesElspeth Neilson
Partner
Wills, Probate and Disputed EstatesJenny Walsh
Partner
Wills, Probate and Disputed EstatesFlorence Arbuthnott
Senior Associate
Wills, Probate and Disputed EstatesLesley Boreham
Associate
Wills, Probate and Disputed EstatesElla Coles
Paralegal
Wills, Probate and Disputed EstatesJoseph Gunn
Associate
Wills, Probate and Disputed EstatesChloe Knight
Paralegal
Wills, Probate and Disputed EstatesMaggie Leiper
Consultant
Wills, Probate and Disputed EstatesJulia Lind Andersson
Solicitor
Wills, Probate and Disputed EstatesAngela Marangone
Solicitor
Wills, Probate and Disputed EstatesIsabelle Murphy
Trainee Solicitor
Wills, Probate and Disputed EstatesRoshni Pandya
Solicitor
Wills, Probate and Disputed EstatesLaura Parkinson
Paralegal
Wills, Probate and Disputed EstatesSophie Price
Solicitor
Wills, Probate and Disputed EstatesWillow Smith
Paralegal
Wills, Probate and Disputed EstatesJessica Smith
Paralegal
Wills, Probate and Disputed EstatesSamantha Tayler-Auld
Senior Associate
Wills, Probate and Disputed EstatesJenna Vasu
Trainee Solicitor
Wills, Probate and Disputed EstatesView the
whole team
