Excepted Estates IHT UK (2026): When You Don't Need to File an IHT400

An excepted estate is an estate that qualifies under HMRC regulations as one that does not need to complete and submit a full IHT400 (Inheritance Tax Account) to HMRC. Because no IHT is payable on these estates, Parliament has given HMRC the power to create a simplified reporting regime for them: (1) THE STATUTORY POWER (IHTA 1984 s.256): IHTA 1984 s.256 empowers HMRC to make regulations prescribing which estates are 'excepted' from full IHT reporting. These regulations are the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (SI 2004/2543), most recently amended by SI 2021/1167; (2) THE 1 JANUARY 2022 CHANGE: for deaths on or after 1 January 2022 in England, Wales, and Northern Ireland (the rules differ slightly in Scotland), HMRC made a fundamental change to excepted estate reporting: (a) the IHT205 form ('Return of estate information') was ABOLISHED — it no longer exists for deaths on or after that date; (b) the IHT217 form (transferred nil-rate band claim for excepted estates) was also abolished; (c) instead, the information that was previously recorded on the IHT205 is now submitted as part of the online probate application through the HMCTS MyHMCTS service. The probate application simply asks a series of questions about the estate's value and composition — no separate form to send to HMRC; (3) WHAT THIS MEANS PRACTICALLY: if the estate qualifies as an excepted estate, the executor or personal representative: (a) does NOT file an IHT400 or any IHT form with HMRC; (b) DOES complete the online probate application (or PA1P on paper if preferred), which includes estate value questions; (c) if a transferable nil-rate band or transferable RNRB is being claimed, these are noted in the probate application — no IHT217 needed; (4) THE VAST MAJORITY OF ESTATES: around 94% of UK estates each year are excepted estates — the deceased had no taxable estate or the estate passed to a surviving spouse or charity. For most executors, the full IHT400 will never be required.

The IHT (Delivery of Accounts) (Excepted Estates) Regulations 2004 as amended by SI 2021/1167 create three categories of excepted estate for deaths on or after 1 January 2022: (1) SMALL VALUE EXCEPTED ESTATE: an estate qualifies as small value where: (a) the GROSS value of the estate does not exceed the IHT nil-rate band (£325,000); OR (b) the gross value exceeds £325,000 but the estate is wholly exempt (typically entirely passing to a surviving UK-domiciled spouse or civil partner under IHTA s.18); AND (c) the estate includes no more than £150,000 in assets situated outside the UK; AND (d) the deceased held no interest in trust property (other than interests passing by survivorship on a joint tenancy — which are not in the estate for IHT purposes); AND (e) the deceased made no chargeable transfers in the 7 years before death (small gifts, annual exemption, and normal expenditure from income — being fully exempt — do not count); AND (f) the deceased was domiciled in the UK; (2) EXEMPT EXCEPTED ESTATE (the post-2022 expansion): an estate qualifies as an exempt excepted estate where: (a) the gross estate value is between £325,000 and £3,000,000 (the pre-2022 cap was £1,000,000 — this tripling is the most significant change of SI 2021/1167); AND (b) the estate qualifies as wholly or largely exempt from IHT (because the net taxable estate, after deducting liabilities, is all passing to a surviving UK-domiciled spouse or civil partner, or to qualifying charities); AND (c) no more than £150,000 in assets outside the UK; AND (d) no interests in discretionary trusts; AND (e) no chargeable transfers in the 7 years before death; (3) FOREIGN DOMICILIARY EXCEPTED ESTATE: an estate qualifies where: (a) the deceased was NOT domiciled in the UK at death (and was not treated as UK-domiciled under IHTA s.267); AND (b) the value of the deceased's UK assets does not exceed £150,000. Where a non-domiciliary held UK assets exceeding £150,000, a full IHT400 is required even if no IHT is ultimately payable.

Even where no IHT is payable, a full IHT400 may be required if the estate falls outside the excepted estate categories: (1) ESTATE VALUE EXCEEDS £3 MILLION: even if everything passes to a spouse or charity, a gross estate above £3,000,000 requires a full IHT400 (under the exempt category, the upper limit is £3m — above this, full reporting is required); (2) IHT IS ACTUALLY PAYABLE: any estate with a net chargeable estate above the nil-rate band (and RNRB, if applicable) that cannot be fully covered by reliefs requires an IHT400; (3) ASSETS IN DISCRETIONARY TRUSTS: if the deceased was the life tenant of an interest in possession trust (the trust assets form part of their estate under IHTA s.49(1)) OR they had a discretionary trust interest — full IHT reporting is required; (4) ASSETS OUTSIDE THE UK EXCEEDING £150,000: any estate with overseas assets above this threshold cannot be an excepted estate; (5) CHARGEABLE LIFETIME TRANSFERS OR FAILED PETS: if the deceased made chargeable lifetime transfers (CLTs) or potentially exempt transfers (PETs) that became chargeable on death within 7 years, a full IHT400 is required to account for these; (6) BUSINESS PROPERTY RELIEF OR AGRICULTURAL PROPERTY RELIEF: an estate claiming BPR or APR to reduce the chargeable estate requires an IHT400 — even if the reliefs reduce the IHT bill to nil, the calculations must be checked; (7) FOREIGN DOMICILIARIES WITH UK ASSETS OVER £150,000: even if no IHT is payable (because a non-domiciliary's worldwide estate is not subject to UK IHT), UK assets above £150,000 require full reporting; (8) DISCRETIONARY WILL TRUSTS OR PILOT TRUSTS: wills that create discretionary trusts on first death (NRB trusts, etc.) will usually require an IHT400 to account for the trust assets; (9) TRANSFERABLE NRB/RNRB CLAIMS ABOVE EXCEPTED LIMITS: if the estate is within the excepted criteria otherwise but requires a complex transferred NRB or RNRB calculation — this should be possible to handle within the online probate application for a simple full-transfer claim, but complex calculations may require a full IHT400.

The transferable nil-rate band (TNRB) allows the unused NRB from a predeceased spouse or civil partner to be transferred to the surviving spouse's estate (IHTA s.8A). Before 2022, claiming TNRB for an excepted estate required submitting IHT217 alongside the IHT205. The 2022 reforms changed this: (1) IHT217 ABOLISHED: as of 1 January 2022, the IHT217 form no longer exists. There is nothing to file separately with HMRC for a TNRB claim by an excepted estate; (2) HOW TO CLAIM TNRB FOR AN EXCEPTED ESTATE NOW: the TNRB claim is made within the online probate application. The applicant provides details of the predeceased spouse/civil partner, confirms the unused proportion of their NRB, and attaches supporting evidence (the predeceased spouse's death certificate and, where available, their grant of probate); (3) EVIDENCE REQUIRED FOR TNRB CLAIM: (a) death certificate of the predeceased spouse/civil partner; (b) evidence that the first estate used less than 100% of the NRB — typically shown by the value of the first estate, any grants of probate, or a copy of the IHT200/IHT205 from the first death; (c) if the predeceased spouse's estate was so small that no IHT form was ever filed, a statement of the estate's value should suffice; (4) EFFECT ON THE EXCEPTED ESTATE THRESHOLD: for TNRB purposes, the effective NRB for the surviving spouse can be up to £650,000 (100% of their own NRB + 100% of the transferred NRB). The excepted estate 'small value' threshold of £325,000 does NOT double — the TNRB is a calculation within the online probate application, not a change to the excepted estate cap. However, the 'exempt' excepted estate category's upper limit of £3 million applies regardless of TNRB; (5) TRANSFERABLE RNRB: the transferred RNRB works similarly — claimed via the online probate application for excepted estates, no IHT436 required for estates within the excepted limits.

Handling an excepted estate involves less paperwork than a full IHT estate but still requires careful record-keeping: (1) STEP 1 — VALUE THE ESTATE: (a) list all assets at the date of death (bank accounts, investments, property, personal effects, vehicles, business interests); (b) obtain professional valuations for land and buildings (RICS valuation or estate agent confirmation), investments (stock exchange closing prices), and business interests; (c) deduct funeral expenses (once paid) and any outstanding debts (mortgage, loans, credit cards, utility arrears); (d) the GROSS estate is the total of all assets before deductions; the NET estate is after deductions; (2) STEP 2 — CHECK THE EXCEPTED ESTATE CONDITIONS: (a) gross estate ≤ £325,000 (small value); OR (b) gross estate ≤ £3m AND entirely exempt (spouse/charity)? (c) any assets abroad > £150,000? (d) any discretionary trust interests? (e) any chargeable gifts in last 7 years? (f) UK-domiciled at death? (3) STEP 3 — SUBMIT THE ONLINE PROBATE APPLICATION: using HMCTS MyHMCTS (or form PA1P by post), complete the probate application including: (a) estate values; (b) whether any assets pass by survivorship; (c) TNRB/TRNRB claim if applicable; (d) no separate IHT form is required; (4) RECORDS TO KEEP (MINIMUM 12 YEARS): even though no IHT form is filed, HMRC can enquire into an estate for up to 20 years from the date of death in cases of fraud or deliberate omission (and typically up to 6 years from the grant date for other enquiries). Keep: (a) the grant of probate; (b) all asset valuations; (c) bank statements showing balances at death; (d) property valuations; (e) evidence of debts; (f) evidence of any lifetime gifts; (5) HMRC CHECKS: HMRC receives a copy of every grant of probate from the Probate Registry. They can raise enquiries on any estate — excepted or not. A well-documented estate file is essential protection; (6) IF WRONG: if an estate is submitted as excepted but later turns out to exceed the limits (e.g. a pension lump sum was overlooked), the executor must notify HMRC and submit a full IHT400 — HMRC can impose penalties for incorrect reporting.