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IHT Forms - What to do When Someone Dies
When someone dies there are various forms that need to be completed for inheritance tax purposes, even if there is no inheritance due on the estate. However, the forms are different depending on whether or not IHT is due.
When is IHT payable?
Inheritance tax is payable on someone’s estate exceeds the inheritance tax threshold. The threshold is currently £325,000. This can be doubled to £650,000 where the deceased’s spouse or civil partner did not use their nil rate band on their death.
There is no tax to pay if everything is left to the deceased’s spouse or civil partner. There are also other exemptions which may reduce the tax due.
Valuing the estate
Before you can decide which form you need to complete, the executor must value the estate. Broadly this involves valuing the assets and deducting the debts and liabilities. Guidance on valuing a person’s estate for inheritance tax purposes can be found on the GOV.UK website at www.gov.uk/valuing-estate-of-someone-who-died/overview.
The inheritance forms should be sent when applying for a grant of representation (see www.gov.uk/wills-probate-inheritance/applying-for-a-grant-of-representation for further details).
The form that you should use depends on whether there is any inheritance tax to pay.
If there is no inheritance tax to pay, you only need to complete the short form, form IHT205. You will need to provide information about the person who died and also some information about the deceased’s estate, including details of any gifts that they made in the seven years prior to their death.
Form IHT205 and the accompanying notes are available to download from the GOV.UK website.
If the deceased lived abroad and there is no IHT to pay, form IHT207 should be used instead of form IHT205. This can be downloaded from the GOV.UK website.
If the deceased’s spouse or civil partner did not use their nil rate band when they died, it is necessary to claim the unused portion for use against the deceased’s estate. This is done by completing form IHT217. Where relevant, this should be sent with form IHT205.
If there is inheritance tax to pay, it is necessary to complete the longer IHT400 form. Unlike the short forms, this form must be sent to HMRC within one year of the end of the month in which the person died. So, for example, if a person died on 10 April 2015, the form must be submitted by 30 April 2016. A penalty may be charged if the form is submitted late.
Form IHT400 is the inheritance tax account and comprises a form and separate schedules, some or all of which may need to be completed. Prior to completing the form, it is necessary to apply for an IHT reference number and payslip. This can either be done online or by completing form IHT422.
When completing IHT400, you will need to provide details of the deceased, their will, the estate and what makes up the inheritance tax account. The form and guidance notes on its completion are available on the GOV.UK website.
Need to know: Penalties may be charged if the information provided is inaccurate.