Excepted Estates UK (2026): Simplified Probate Reporting, IHT205 Replacement, and Who Qualifies

An excepted estate is an estate where the personal representatives do NOT have to submit a full inheritance tax account (Form IHT400) to HMRC. Instead, they apply for probate with simplified information and make a declaration that the estate qualifies. On 1 January 2022, the rules were fundamentally reformed: (1) WHAT CHANGED ON 1 JANUARY 2022: the Inheritance Tax (Delivery of Accounts) (Excepted Estates) (Amendment) Regulations 2021 (SI 2021/1167) came into force for deaths on or after 1 January 2022. The changes: (a) FORM IHT205 ABOLISHED: the old IHT205 (previously used for excepted estates) was abolished for deaths from 1 January 2022. Executors no longer complete a separate paper IHT form for excepted estates; (b) ONLINE PROBATE APPLICATION INSTEAD: executors now apply for probate using Form PA1P (with a will) or PA1A (without a will) via the HMCTS online probate service. Asset/liability information is entered in the probate application itself — no separate IHT form; (c) THRESHOLDS INCREASED: the financial thresholds for the excepted estate categories were significantly increased, meaning many more estates now qualify as excepted; (2) THE THREE CATEGORIES OF EXCEPTED ESTATE (Excepted Estates Regulations 2004 as amended): (a) LOW VALUE EXCEPTED ESTATES; (b) EXEMPT TRANSFER EXCEPTED ESTATES (spouse/civil partner or charity); (c) FOREIGN DOMICILE EXCEPTED ESTATES; (3) WHY THIS MATTERS: where an estate qualifies as excepted, the administration is significantly simpler — no IHT400, IHT421, or IHT supplementary schedules are required. The executors make a declaration that the estate qualifies and proceed to probate. HMRC can still enquire into any estate within 35 days of the grant of probate (or in limited circumstances, up to 6 months).

The Excepted Estates Regulations set out three categories, each with specific conditions: (1) CATEGORY 1 — LOW VALUE EXCEPTED ESTATE: an estate qualifies where: (a) The gross value of the estate (worldwide assets) does not exceed the IHT nil rate band IN FORCE AT DEATH (currently £325,000); OR (b) The gross value of the estate does not exceed the NRB + £250,000 WHERE the only transfers are exempt transfers to a surviving UK-domiciled spouse/civil partner or to a charity; ADDITIONAL CONDITIONS FOR BOTH: (i) Deceased was domiciled in the UK; (ii) No chargeable transfers in the 7 years before death exceeding £250,000 (the 'lifetime gifts threshold'); (iii) The estate does not include: a trust from which the deceased benefited; a foreign element (foreign domicile or assets); certain IHT reliefs (BPR; APR — NOTE: this is a key change from 2022; previously BPR/APR estates could be excepted if the net estate was below NRB — post-2022, the GROSS value is used, so BPR/APR assets count towards the threshold even though they are relieved for IHT); (2) CATEGORY 2 — EXEMPT TRANSFER EXCEPTED ESTATE: where the estate is left entirely (or almost entirely) to a surviving UK-domiciled spouse or civil partner OR to qualifying charities, with: (a) Gross estate not exceeding £3,000,000 (significantly increased from £1,000,000 pre-2022); (b) No trust interests; (c) No foreign domicile; (d) Lifetime gifts in the 7 years before death do not exceed £250,000; (3) CATEGORY 3 — FOREIGN DOMICILE EXCEPTED ESTATE: where the deceased was not domiciled in the UK at death and: (a) The UK assets do not exceed £150,000 (unchanged); (b) No UK land or buildings are included in the estate (or they are included in the UK asset total which is within £150,000).

Despite the expanded excepted estate provisions, a number of situations STILL require a full IHT400 and the traditional HMRC account process: (1) ESTATE VALUE EXCEEDS THE THRESHOLDS: (a) Gross estate over £325,000 (with no spouse/charity exemption applying); (b) Gross estate over £3,000,000 (even with spouse/charity exemption); (2) LIFETIME GIFTS EXCEEDING £250,000 IN 7 YEARS: chargeable lifetime transfers or PETs made in the 7 years before death totalling more than £250,000 take the estate outside the excepted categories; (3) TRUST INTERESTS: where the deceased had a beneficial interest in a trust (e.g. an IIP trust; a discretionary trust from which they received distributions), the estate cannot be excepted. The trust assets and the trust's IHT position must be reported on IHT400 plus the relevant supplementary schedules (IHT418 for trusts); (4) BPR AND APR RELIEFS: post-2022 reform, estates using Business Property Relief or Agricultural Property Relief must still file IHT400 if claiming those reliefs — the gross (unreduced) value of BPR/APR assets counts towards the excepted estate threshold, and the reliefs must be formally claimed on the IHT400; (5) TAPER RELIEF CLAIMS: where taper relief is claimed on lifetime gifts, the estate must file IHT400; (6) FOREIGN ELEMENTS: (a) Non-UK domicile (other than Category 3 foreign domicile estates within £150k); (b) Foreign assets in an estate that is otherwise UK domicile; (c) Assets held in foreign trust structures; (7) RNRB CLAIMS: NOTE — the Residence Nil Rate Band (RNRB) and the Transferable RNRB can be claimed in an excepted estate (Category 1 or 2) without filing IHT400, by completing IHT435/IHT436 schedules. However, if the GROSS estate exceeds the excepted estate threshold, IHT400 is required; (8) IHT PAYABLE: if ANY IHT is payable on the estate, IHT400 must be filed regardless of estate value.

For deaths on or after 1 January 2022, the excepted estate process is integrated into the online probate application: (1) STEP 1 — DETERMINE IF THE ESTATE IS EXCEPTED: check the three categories against: gross estate value (include ALL assets — bank accounts; property; shares; life insurance not in trust; personal chattels); lifetime gifts in 7 years; trust interests; domicile; BPR/APR claims. If NO IHT400 triggers apply, the estate is likely excepted; (2) STEP 2 — APPLY FOR PROBATE ONLINE (GOV.UK PROBATE SERVICE): go to gov.uk/applying-for-probate/apply-for-probate. Apply using: Form PA1P — where there is a will; Form PA1A — where there is no will (letters of administration). Complete the online form with: (a) Personal details of the deceased; (b) Details of the executors/administrators; (c) Gross and net estate values (rounded); (d) A declaration that the estate qualifies as excepted (the applicant confirms the estate does not require IHT400); (3) STEP 3 — PAY PROBATE FEES: (a) Estates up to £5,000: no probate fee; (b) Estates over £5,000: £273 per application (from April 2024 — the flat fee replaced the previous tiered structure); additional copies of the grant: £1.50 per copy; (4) STEP 4 — RECEIVE THE GRANT: the Probate Registry issues the grant of probate (or letters of administration). For excepted estates with no IHT payable, the grant should be received within 6–12 weeks of application (though backlogs can extend this); (5) STEP 5 — ADMINISTERING THE ESTATE: once the grant is issued, use it to access bank accounts; sell or transfer property; collect debts. The grant is legal authority to deal with the estate; (6) HMRC ENQUIRY WINDOW: HMRC has 35 days from the grant date to open an enquiry into whether the estate was correctly classified as excepted. In practice, enquiries are rare for genuinely straightforward estates but can be opened within 6 months in certain circumstances. Keep all records for at least 3 years after the grant.

For deaths BEFORE 1 January 2022, the old excepted estate rules and Form IHT205 apply. These are still relevant for estates where administration is ongoing or where HMRC raises enquiries: (1) THE OLD IHT205 (USED FOR DEATHS BEFORE 1 JANUARY 2022): for deaths from 6 April 2004 to 31 December 2021, an excepted estate used Form IHT205 ('Return of Estate Information'). The IHT205 was submitted to the Probate Registry along with the probate application. It was a shortened version of the IHT account — the full IHT400 was not needed; (2) IHT217 — TRANSFERABLE NRB ON IHT205: Form IHT217 was used alongside IHT205 where the deceased's estate also claimed the transferable nil rate band from a deceased spouse. The IHT217 confirmed the first spouse's estate details; (3) THE OLD THRESHOLDS (DEATHS BEFORE 1 JANUARY 2022): (a) Low value estate: gross estate ≤ NRB (£325,000) + £150,000 spousal exemption allowance (so typically ≤ £475,000 for surviving spouse); (b) Exempt transfers estate: gross estate ≤ £1,000,000 (wholly/mostly to spouse or charity); (c) Foreign domicile estate: UK assets ≤ £150,000; (4) IHT205 VS PA1P/PA1A POST-2022: for pre-2022 deaths, IHT205 is still used and filed with the Probate Registry. For post-2022 deaths, asset information is entered in the online PA1P/PA1A application and no separate paper IHT form is needed for excepted estates; (5) WHAT IF YOU ARE ADMINISTERING A PRE-2022 DEATH NOW: use IHT205 (available from HMRC); check the pre-2022 thresholds; file with the Probate Registry. The simplified 2022 rules do NOT apply retrospectively to pre-2022 deaths; (6) ONGOING HMRC ENQUIRIES: where HMRC has opened an enquiry into a pre-2022 excepted estate, the old IHT205 rules apply to that enquiry — the post-2022 regulations do not affect previously determined liability.