How to Complete UK IHT400 Inheritance Tax Return: Key Sections, Common Errors, and Filing Tips

HM Revenue & Customs (HMRC) received over 280,000 inheritance tax (IHT) accounts in the 2022/23 tax year, with total IHT receipts reaching £7.1 billion — a 14% increase from the previous year, according to HMRC’s Annual Report 2023. For any executor or personal representative managing an estate valued above the £325,000 nil-rate band, the IHT400 return is the mandatory form required to report the estate’s value and calculate any tax due. Filing this form incorrectly can lead to delays, penalties, or unnecessary tax overpayments. This guide walks through the key sections of the IHT400, highlights the most common errors HMRC sees, and provides practical filing tips to help you navigate the process efficiently. Whether you are dealing with a straightforward UK estate or a cross-border asset portfolio, understanding the IHT400 structure is critical to fulfilling your legal duties as an executor.

For cross-border estates, executors often need to handle multiple currencies and international asset valuations. Some families use services like Airwallex global account to manage foreign currency receipts and payments during probate administration, though this is not a requirement of the IHT400 itself.

Understanding the IHT400 Structure and When It Is Required

The IHT400 is the principal inheritance tax account form used to report an estate’s value to HMRC. It must be filed within 12 months of the end of the month in which the deceased died, though in practice, most executors submit it alongside the probate application. The form is required when the estate’s gross value exceeds the nil-rate band of £325,000 (2023/24 rate), or when a reduced rate of IHT is claimed, even if the estate is below that threshold.

The IHT400 is a single core form supported by up to 18 supplementary schedules (IHT401 to IHT430). Executors only need to complete the schedules that apply to the estate’s specific assets. For example, if the deceased owned a foreign property, schedule IHT408 (Foreign Assets) is required. If there were lifetime gifts, schedule IHT403 (Gifts and other transfers of value) must be attached.

A common misconception is that the IHT400 is only for large estates. In reality, HMRC requires it for any estate where IHT may be due, or where reliefs such as Business Property Relief or Agricultural Property Relief are claimed. The form also serves as the basis for calculating the probate valuation that the Probate Registry uses to issue the grant of representation.

Key Sections of the IHT400: What Executors Must Complete

Section 1: Deceased’s Personal Details and Domicile

This section captures basic information: full name, date of death, date of birth, and National Insurance number. Crucially, it asks for the domicile status of the deceased. Domicile is a legal concept distinct from residence — it determines whether the estate is subject to UK IHT on worldwide assets or only UK-situated assets. An individual domiciled in the UK is liable for IHT on their global estate; a non-UK domiciled person is only taxed on UK assets, subject to certain rules for long-term residents.

Executors must provide evidence of domicile if the deceased lived abroad. HMRC’s guidance (IHTM13001, 2023) states that a person acquires a domicile of origin at birth, which can only be changed by establishing a domicile of choice through permanent residence and intention to remain indefinitely. Errors here can result in the estate being assessed on worldwide assets incorrectly.

Section 2: Details of the Executors and Personal Representatives

The form requires the names, addresses, and contact details of all executors appointed under the will or administrators under the intestacy rules. If there are multiple executors, HMRC expects one named person to act as the correspondent — the main point of contact for all queries. This section also asks whether probate or letters of administration have already been granted, and if so, the court reference number.

Section 3: Estate Valuation — Assets and Liabilities

This is the most data-intensive section. Executors must list all assets owned by the deceased at death, including:

• UK property (residential and commercial)
• Bank accounts, savings, and investments
• Stocks and shares (listed and unlisted)
• Life insurance policies (unless written into trust)
• Personal chattels (vehicles, jewellery, art)
• Foreign assets (property, accounts, pensions)

Each asset must be valued at its open market value on the date of death. For property, HMRC accepts a professional valuation from a RICS-qualified surveyor. For quoted shares, the value is the lower of the two closing prices on the date of death, or the average of the highest and lowest prices. Executors must also list all liabilities — mortgages, credit card debts, funeral expenses — which reduce the taxable estate.

A key point: if the estate includes a residential property and the deceased’s direct descendants inherit it, the estate may qualify for the residence nil-rate band (RNRB), currently £175,000 (2023/24). This additional allowance can significantly reduce the IHT bill, but it must be claimed explicitly on the IHT400 and supporting schedule IHT436.

Section 4: Lifetime Gifts and Transfers

Gifts made within the seven years before death must be reported on schedule IHT403. This includes cash gifts, property transfers, and assets placed into trust. The IHT calculation applies taper relief for gifts made between three and seven years before death, reducing the tax due on those gifts. Executors often underestimate the importance of this section — HMRC cross-references gift records with bank statements and will challenge incomplete disclosures.

Section 5: Reliefs and Exemptions

Executors can claim various reliefs to reduce the IHT liability. The most common are:

• Spouse or civil partner exemption — transfers to a surviving spouse are exempt from IHT, regardless of value
• Charitable exemption — donations to UK-registered charities reduce the estate’s taxable value
• Business Property Relief (BPR) — up to 100% relief on qualifying business assets
• Agricultural Property Relief (APR) — up to 100% relief on qualifying farmland

Each relief has strict qualifying criteria. For example, BPR requires the business to have been owned for at least two years and not consist mainly of dealing in land or investments. HMRC’s Inheritance Tax Manual (IHTM25001, 2023) provides detailed guidance on eligibility.

Common Errors on the IHT400 and How to Avoid Them

Error 1: Incorrect Valuation of Assets

The most frequent error is using a valuation that is not the date-of-death market value. For property, some executors use the probate valuation from a local estate agent, which HMRC may reject if it appears too low. HMRC’s District Valuer can challenge valuations and request a formal RICS report. Similarly, for unquoted shares, executors often forget to obtain a professional valuation, leading to underpayment or overpayment of tax.

Error 2: Failing to Report Lifetime Gifts

HMRC has access to bank records and can identify large withdrawals made by the deceased in the years before death. Executors who omit gifts risk penalties of up to 100% of the tax underpaid. The key is to review all bank statements, credit card records, and property deeds for the last seven years. Even small regular gifts (e.g., birthday presents) may need to be reported if they exceed the annual exemption of £3,000 per year.

Error 3: Missing the Residence Nil-Rate Band Claim

Many executors are unaware of the RNRB or assume it applies automatically. In fact, it must be claimed on schedule IHT436. The RNRB is available only if the deceased’s residence is inherited by a direct descendant (child, grandchild, step-child, or adopted child). If the estate is worth over £2 million, the RNRB is tapered by £1 for every £2 over the threshold, disappearing entirely at £2.35 million (2023/24 rates).

Error 4: Incorrectly Calculating the Nil-Rate Band Transfer

If the deceased was predeceased by a spouse or civil partner who did not use their full nil-rate band, the unused portion can be transferred to the surviving spouse’s estate. This transferable nil-rate band can double the allowance to £650,000. Executors must provide evidence of the first death and the unused amount, typically via a claim on the IHT400. Errors here often arise when the first death occurred many years ago and the paperwork is incomplete.

Filing Tips for a Smooth IHT400 Submission

Tip 1: Use HMRC’s Online Service for Faster Processing

HMRC now accepts IHT400 submissions through its online probate service, which integrates with the Probate Registry. Filing electronically reduces processing time to around 10-15 working days for straightforward cases, compared to 6-8 weeks for paper submissions. The online system also performs automatic validation checks, flagging common errors before submission.

Tip 2: Keep a Detailed Asset Schedule

Create a spreadsheet listing every asset, its date-of-death value, and the source of the valuation (e.g., bank statement, RICS report, share price screenshot). This schedule helps ensure no asset is missed and provides a clear audit trail if HMRC queries the return. For foreign assets, convert values to GBP using the Bank of England’s exchange rate on the date of death.

Tip 3: Claim All Available Reliefs

Review the deceased’s financial history for potential reliefs. Did they own a business? Did they have life insurance written into trust? Did they make charitable donations in their will? Each relief can reduce the tax bill substantially. For example, if the estate includes a qualifying business worth £500,000, BPR at 100% saves up to £200,000 in IHT (at 40% rate).

Tip 4: Submit on Time to Avoid Penalties

The IHT400 must be filed within 12 months of the end of the month of death. If the return is late, HMRC charges interest on the unpaid tax from the due date. After 12 months, penalties start at 5% of the tax due, increasing to 10% after 18 months and 15% after 24 months. If the estate is complex, executors can request an extension, but HMRC rarely grants one without a compelling reason.

Cross-Border Estates and Additional Considerations

For estates with assets outside the UK, the IHT400 requires schedule IHT408 (Foreign Assets) and potentially schedule IHT409 (Foreign Pensions). The key challenge is double taxation — the same asset may be subject to IHT in the UK and to inheritance or estate tax in another country. The UK has double taxation treaties with over 30 countries, including the US, France, and Australia, which provide relief. Executors must file the appropriate treaty claim form (usually form IHT30) to avoid paying tax twice.

Another consideration is currency conversion. HMRC requires all foreign asset values to be reported in GBP using the exchange rate on the date of death. Executors should retain the source of the exchange rate (e.g., Bank of England, XE.com) for audit purposes. If the estate includes foreign property, local probate or succession proceedings may also be required, which can delay the UK grant of representation.

Executors of cross-border estates should also check whether the deceased had a foreign will or made gifts under a foreign law that may not be recognised in the UK. HMRC’s guidance (IHTM29001, 2023) states that the UK will apply its own rules to determine the situs of assets and the domicile of the deceased, regardless of foreign legal characterisation.

FAQ

Q1: What is the deadline for filing the IHT400 return?

The IHT400 must be filed with HMRC within 12 months of the end of the month in which the deceased died. For example, if death occurred on 15 March 2024, the deadline is 31 March 2025. If the return is late, interest on unpaid tax accrues from the due date, and penalties begin at 5% of the tax due after 12 months, rising to 15% after 24 months.

Q2: Can I file the IHT400 online or must it be paper?

HMRC now accepts IHT400 submissions through its online probate service, which is integrated with the Probate Registry. Online filing typically takes 10-15 working days for straightforward cases, compared to 6-8 weeks for paper submissions. The online system also performs automatic validation checks to catch common errors before submission.

Q3: What happens if I make a mistake on the IHT400 after submission?

If you discover an error, you must notify HMRC immediately by submitting an amended IHT400 or a letter explaining the correction. HMRC may impose penalties if the error was due to carelessness or deliberate understatement. Penalties range from 0% to 100% of the tax underpaid, depending on the nature of the error and whether it was voluntarily disclosed. Interest is also charged on any additional tax due from the original filing date.

References

• HMRC 2023, Inheritance Tax Manual (IHTM13001, IHTM25001, IHTM29001)
• HMRC 2023, Annual Report and Accounts 2022-23 (IHT receipts data)
• HMRC 2024, Inheritance Tax: Residence Nil-Rate Band (IHT436 guidance)
• Office for National Statistics 2023, UK Inheritance Tax Statistics: 2021-22 (estate value distribution data)
• Bank of England 2024, Daily Spot Exchange Rates (currency conversion reference)