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IHT403 form – Gifts and other transfers of value explained

IHT403 is a form that is used in the United Kingdom for Inheritance Tax purposes to report gifts that were made by the deceased person in the previous 7 years.
It is also known as the Inheritance Tax account form and is required to be completed by the executor or administrator of an estate when the deceased person’s estate is subject to Inheritance Tax.

In this article, we will explore the purpose of IHT403, the information that needs to be included in the form, and how it is used by HM Revenue and Customs (HMRC) to calculate the Inheritance Tax liability.

Information required in IHT403

IHT403 is a detailed form that requires the executor or administrator of the estate to provide information about the deceased person’s assets and liabilities. The information that needs to be included in the form includes:

  • Personal details of the deceased person: This includes their name, date of birth, and date of death.
  • Details of the executor or administrator – This includes their name, address, and relationship to the deceased person.
  • Details of the estate – This includes the address of the property and whether it is freehold or leasehold. If the property is leasehold, details of the lease are also required.
  • Details of bank and building society accounts – This includes the name of the account holder, account number, and the balance at the date of death.
  • Details of shares and securities – This includes the name of the company, the number of shares held, and the value of the shares at the date of death.
  • Details of life insurance policies – This includes the name of the policyholder, the name of the insurer, and the value of the policy at the date of death.
  • Details of pensions – This includes the name of the pension scheme, the value of the pension at the date of death, and the type of pension scheme.
  • Details of debts and liabilities – This includes any outstanding debts or liabilities that the deceased person had at the date of death.
  • Details of gifts made by the deceased person – This includes details of any gifts made by the deceased person in the seven years prior to their death.
  • Details of any exemptions or reliefs – This includes any exemptions or reliefs that the estate may be entitled to, such as the spouse exemption or agricultural property relief.

The executor or administrator of the estate must ensure that all the relevant information is included in the form and that it is accurate and up-to-date.

Calculating the Inheritance Tax liability

Once the IHT403 form has been completed and submitted to HMRC, it is used to establish whether inheritance tax is payable and if so the amount due, this also includes calculating the inheritance tax liability. The value of the estate is calculated by adding up all the assets and deducting any liabilities.

If the deceased person for example left their estate to their spouse or civil partner, the estate may be entitled to the spouse exemption. This means that the value of the estate is exempt from Inheritance Tax and the full value of the estate can be passed to the surviving spouse or civil partner without any Inheritance Tax liability.

In addition to these exemptions and reliefs, the executor or administrator of the estate may also be able to claim other deductions, such as funeral expenses or debts owed by the deceased person.

The executor or administrator of the estate is responsible for paying the Inheritance Tax liability to HMRC. This must be done within six months of the date of death. If the Inheritance Tax liability is not paid on time, interest and penalties may be charged.

Overview

Inheritance Tax can be a complex and confusing area of taxation, particularly for those who are dealing with the estate of a deceased loved one. However, completing the IHT403 form accurately and providing all the relevant information is essential to ensure that the Inheritance Tax liability is calculated correctly.

If you are the executor or administrator of an estate and you are unsure about how to complete the IHT403 form, it is important to seek professional advice in Inheritance Tax. They can provide you with the guidance and support you need to ensure that the form is completed accurately and that the Inheritance Tax liability is calculated correctly.

Overall, IHT403 is an important form that plays a crucial role in the Inheritance Tax process in the UK. By providing accurate and up-to-date information, the executor or administrator of an estate can ensure that the Inheritance Tax liability is calculated correctly and that the estate is distributed in accordance with the wishes of the deceased person.

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.

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