What is Inheritance Tax?

It is a tax on someone’s estate (their property, possessions and money) collected by HMRC. Most estates do not need to pay Inheritance Tax, because the value of the estate is below the inheritance tax threshold or it is passed to a spouse, civil partner or charity and so is exempt.

The current threshold for 2024/25 is £325,000, which is set by the UK Government.

The threshold can be increased to £500,000 if the person who died owned a property which is left to children or grandchildren. This is an additional tax allowance of £175,000 and is known as the residence nil rate band.

Do I need to complete Inheritance Tax Forms?

You must first calculate the value of the estate to see if it is likely that inheritance tax is payable.

If inheritance tax is due, you need to report this to HMRC by completing an account, which is done by submitting an IHT400 form and supplementary forms.

Before you can submit the IHT400 forms to HMRC and pay any tax due, you must apply for a reference number. You should apply for this as soon as you think inheritance tax may be due.

There are time limits for paying inheritance tax and submission of the IHT400.

Once the tax is paid, HMRC will issue a tax authorisation letter so that you can then submit this to the Court with the Application to apply for Confirmation.

The Executor is legally responsible for completion of the forms and payment of tax, if you make a mistake you might have to make a payment from your own money.

The IHT400 is a complex tax return, which must be done properly, and we can do that for you.