Losing a loved one is a difficult and emotional time. In addition to grieving, there are practical tasks to handle, including dealing with their estate. If you are the estate executor, one of your responsibilities is to file an inheritance tax return with HM Revenue and Customs (HMRC).
Two main forms for filing an inheritance tax return are the IHT205 and the IHT400. The form you need to use depends on the size and complexity of the estate you administer.
The IHT205
This is a simpler form used for estates that fall below the inheritance tax threshold or have certain exemptions, such as when the estate is left to a spouse or charity. If the estate is valued below the current threshold of £325,000 or is below £2 million and the assets are being passed to a spouse or civil partner, you can use the IHT205. This form requires less information than the IHT400 and is often faster and easier to complete.
The IHT400
This is a more complex form used for larger and more complicated estates. If the estate is valued above the inheritance tax threshold or has more complex assets or arrangements, such as trusts, you must use the IHT400. The IHT400 requires a more detailed account of the assets and liabilities of the estate and may require professional assistance, such as from an accountant or solicitor. If you are unsure whether to use the IHT205 or IHT400, it is recommended that you seek professional advice.
It is important to note that even if you do not need to pay inheritance tax, you still need to file an inheritance tax return if the estate is above a certain value or has certain types of assets. Failure to file the correct form or pay necessary taxes can result in penalties and interest charges.
In conclusion, the IHT205 and IHT400 are the two main forms for filing an inheritance tax return with HMRC. The form you need to use depends on the size and complexity of the estate you administer. You should seek professional advice if unsure which form to use to ensure that you file the correct form and pay any necessary taxes on time.
Are you looking for help completing the IHT400 form or IHT205? Give DIY Probate a call on 0116 2795044, and we’ll gladly help.
