The IHT400 form is a form that you must fill in as part of the probate process, if there is inheritance tax due on the estate.
How do you know if Inheritance Tax is due and If you need to fill in the IHT400 form?
As an executor, you must first determine whether the estate qualifies as a “exempt” estate, an “exempt and excepted” estate, or if neither category applies.
Determining this will then inform which probate form you must use to submit the necessary inheritance tax information to HMRC, as well as how to complete specific elements of the applications for a grant of probate.
If the deceased made significant gifts during their lifetime, received income from a significant trust, or met other criteria, this could result in an inheritance tax liability even if the estate assets do not exceed the inheritance tax threshold.
For inheritance tax purposes, the value of the estate for the grant of probate or confirmation is only one component of the gross estate.
The estate is a “excepted” estate or a “exempt and excepted” estate where the deceased was a UK resident at the time of death and either:
1. Exceeded estate – The gross estate subject to inheritance tax does not exceed the exempted estates limit, which is presently £325,000 and is correlated with the inheritance tax threshold level.
OR 2. Exempt and excepted estate – (a) the gross value of the estate is less than £1,000,000 and (b) because all or part of the estate passes to the deceased’s spouse, who must also be a UK resident, or to a charity or other entity qualifying as exempt from inheritance tax, the estate is less than the excepted estates limit after deducting liabilities and those exemptions only.
Additionally, each of the following circumstances needs to be the case for both categories:
1. The total taxable value of any “designated transfers” (see below) does not exceed £150,000.
2. Any gifts of land or structures made by the deceased to an individual were given with a taxable value of no more than £150,000.
3. There is only one such trust, and the total value of the assets held therein does not exceed £150,000 if, for inheritance tax purposes, assets kept in a trust are considered to be a part of the estate of the dead.
4. The gross value of all foreign assets in the estate, if any, does not exceed £10,000.
5. The dead didn’t dispose of any assets while still enjoying their benefits.
6. The dead had chosen not to have the income tax charge applied to (a) any assets they previously owned in which they retained a benefit or (b) their contribution to the acquisition price of any assets they contributed to but in which they retained a benefit.
7. The dead did not get a pension from a different source.
8. Where (a) the benefit was unsecured and (b) the deceased person became eligible for the benefit as a relevant dependent of a person who passed away at age 75 or older, the deceased person did not receive any benefits under a registered pension scheme.
Only the following types of assets may be given away as “specified transfers”:
- Cash
- Quoted shares and cash
- Furniture and personal items
- Real estate and structures
A gift of land or a building is only considered a defined transfer if it was made in full to another person. A gift of land and buildings cannot be considered a specified transfer if it was made to a trust or a business, the deceased retained any benefit from the gift, or they were given the right to use the property.
The executors can now properly fill out the probate forms after determining whether the estate is exempt or exempt and excepted.
In general, inheritance tax is owed if the estate’s worth exceeds the inheritance tax threshold, also known as the “nil rate band”.
IHT400 form: Do I need to fill it out?
In Scotland and England, you must submit Form IHT400 if you evaluate the estate and find that it is subject to inheritance tax.
If it turns out that it is not subject to inheritance tax, you must file Form C5 for Scotland or Form IHT205 for England & Wales.
Completing the IHT400 form
In the UK, IHT400 must be filled out if the estate is neither exempt nor exempt and exempted from inheritance tax.
Are you looking for help to complete the IHT400 form? Give DIY Probate a call on 0116 2795044, and we’ll be happy to help.