IHT400: Complete Walkthrough

When to use

Required for any estate NOT qualifying as an 'excepted estate'. Broadly: gross value exceeds the available NRB (£325k, or £3,000,000 if it passes wholly to a spouse/civil partner/charity), foreign assets over £100,000, trust assets in a single trust over £1,000,000, or lifetime gifts over £250,000 in the 7 years before death.

What it does

Running total of all estate assets and debts, the final IHT calculation, and a summary of which schedules apply. Submit to HMRC within 12 months of the end of the month of death; interest accrues on unpaid IHT from month 6.

Watch out for

• Do NOT complete if the estate is an 'excepted estate' — for deaths on or after 1 January 2022 there is no separate paper form: report the estate's gross/net value directly on the probate application (PA1P/PA1A). The old standalone IHT205 form was abolished from that date.
• Sections divide into Assets (A–L), Debts (M), Gifts (N), Working Sheets (P1–P14).
• The final IHT figure on IHT400 is what goes on the IHT421 probate summary.

When to use

Surviving spouse or civil partner dies and the first spouse's NRB was partially or fully unused.

What it does

Calculates the percentage of NRB unused on the first death and applies it to the survivor's estate. Up to 100% can transfer, doubling the survivor's NRB to £650,000 (plus doubled RNRB of £350,000 if main home passes to descendants).

Watch out for

• You need the first spouse's IHT figures or the date-of-first-death estate valuation.
• If first spouse died before 9 Oct 2007, the NRB at the time of the first death is used, then scaled to today's NRB.
• Civil partners (post-Dec 2005) and same-sex married couples get full transferability.

When to use

The deceased made gifts, transfers, or set up trusts within 7 years of death (including Potentially Exempt Transfers and Chargeable Lifetime Transfers).

What it does

Lists each gift with date, recipient, value, and exemptions claimed (£3,000 annual, £250 small gifts, wedding gifts, gifts from surplus income). HMRC applies the 7-year taper: gifts within 3 years = full 40%, then sliding to 0% at 7+ years.

Watch out for

• Gifts consume NRB in DATE ORDER (oldest first) before any remaining NRB flows to the estate.
• Taper reduces the TAX, not the gift value — and only matters when the gift exceeds available NRB.
• Executors have a statutory duty to ask beneficiaries about gifts they received. Incomplete disclosure triggers penalties.
• Gifts with reservation of benefit (e.g., giving away a house but continuing to live in it rent-free) are treated as still in the estate.

When to use

The deceased held assets jointly (bank accounts, property, investments) with another person.

What it does

Declare the deceased's proportionate share. For beneficial joint tenants: assume equal shares unless evidence otherwise. For tenants in common: use the stated shares in the deed.

Watch out for

• A joint bank account with a spouse usually passes by survivorship — but the deceased's share still counts in the IHT estate.
• If the non-deceased owner contributed nothing, HMRC may challenge the 50/50 presumption.

When to use

The estate includes real property.

What it does

Lists each property with address, tenure (freehold/leasehold), valuation at date of death, outstanding mortgage, and intended beneficiary. The sum flows into the main IHT400 assets total.

Watch out for

• Use a RICS red-book valuation for any property worth £250k+ or where IHT is borderline — HMRC can challenge estate agent estimates.
• The RNRB only applies to the deceased's main residence (not buy-to-let), and only if it passes to direct descendants.
• If the deceased downsized before death, downsizing relief may still preserve the RNRB — declare via IHT405 notes.

When to use

The estate holds any shares, bonds, or securities.

What it does

Listed shares (IHT411): value at date of death using the 'quarter-up' rule (lower of two published prices + 1/4 of the difference). Unlisted (IHT412): requires a formal valuation, often from a specialist accountant.

Watch out for

• AIM shares qualifying for Business Relief can be 100% IHT-exempt — declare on IHT413, not IHT411.
• Include accrued dividends declared before death but paid after.

When to use

The deceased had outstanding loans, credit cards, or personal debts at death.

What it does

Lists each debt so it can be deducted from the gross estate. Include mortgage balances (if not already offset in IHT405), utility arrears, and informal family loans.

Watch out for

• Informal loans from family are scrutinised — provide written evidence of the loan at inception.
• Debts specifically charged against exempt assets (e.g., mortgage on charity-left property) don't reduce the taxable estate.

When to use

Filed alongside the probate application — HMRC stamps it as proof the IHT has been paid or is not due.

What it does

One-page summary showing the gross estate, net estate, IHT payable, and what's been paid. The Probate Registry requires the stamped IHT421 before issuing the Grant of Probate.

Watch out for

• IHT must be paid (or first instalment on property/shares) BEFORE probate is granted — use the Direct Payment Scheme (IHT423) to pay IHT directly from the deceased's bank.
• Processing time: HMRC stamps IHT421 within about 20 working days of receiving IHT400.

When to use

The estate leaves at least 10% of the 'baseline amount' to qualifying charities.

What it does

Calculates the charity threshold and confirms the reduced 36% rate applies. The baseline amount is broadly the net estate after spouse/civil partner exemption minus the available NRB.

Watch out for

• Run the numbers both ways — sometimes increasing a charity gift to hit 10% saves more IHT than the extra gift costs.
• The reduced rate applies to the component (free estate, joint property, trust) that meets the 10% test — not automatically to the whole estate.