DIY Guide to Inheritance Tax &

Probate 2024-25

By Tributum Auxillium

All profits from this book will be donated to a suitable

bereavement charity
About the Author

The author is Chartered Accountant who worked in Corporate Audit and Tax for
KPMG, the global financial firm.
He has recently completed inheritance tax and probate as the Executor of an
Estate. When he approached this task he was surprised that while there were a
number of well written guidebooks published on this subject, they were quite old,
rendering some of their information out of date or unusable. The motivation for
this guidebook was therefore to bring the information on inheritance tax and
Probate up to date, and provide a helpful guide to people working in a difficult
situation.
All profits from the sale of this book will be donated to suitable bereavement
charity.

Disclaimer
This information provided in this book is a guide to inform your own thinking
about inheritance tax and probate and should not be used as substitute for
checking the most up to date rules and regulations with the necessary
Government authorities. This book is for information purposes only and is not
intended to be a source of financial advice. This book does not constitute
professional legal or financial advice, is not a substitute for professional legal or
financial advice, and should not be used as such.
The author has made every effort to ensure the accuracy of the information
within this book was correct at the time of publication. The author does not
assume and hereby disclaims any liability for financial loss caused by errors and
omissions.
Introduction

If you are reading this guidebook there is every chance you have lost someone
close to you, or are acting on behalf of such a person. At a time of personal
grief, when people may be feeling at an emotional low point, they can find
themselves called to manage the financial affairs of an Estate, something for
which they may not feel they have the time, energy, or ability to take on. Terms
like ‘inheritance tax’ and ‘Probate’ may be unfamiliar, perhaps even somewhat
intimidating, raising thoughts of lengthy forms, financial management, and
opaque legal terminology, all of which are very much part of the process, but
that does not mean they cannot be overcome with the necessary personal
qualities.
In such circumstances many people will look to turn the matter over to a
financial professional or a lawyer to take on the responsibility for them. No
criticism is implied of such choice and no doubt it is the right choice for many
people, though it comes with a significant financial costs, and potentially an
extended time to complete the work.
The financial cost alone may be enough to push some people to consider taking
on the work themselves, while others are by nature independent and would
rather do things for themselves if possible. The fact you are reading this book
suggests you have at least some interest in taking on
While there are some aspects of Estate management that will almost certainly
require professional help, such as the sale of a property, the inheritance tax and
Probate aspects of the Estate have been designed by the Government to allow
them to be completed by the individual, without the need for paid helpers. It is to
people who wish to take on this responsibility themselves that this guidebook is
addressed.
The complexity of the work involved increases with the financial value of the
Estate and the assets it comprises. At the lower end of the scale, an Estate
comprising a small amount of cash only should not require any inheritance tax
work and it may even be possible to avoid the need for Probate if the institutions
holding the money have set a high enough threshold. At the other end of the
scale, a multi-million pound Estate comprised of cash, shares, multiple
properties, some in the UK, some abroad, and a share of a business venture in
Mongolia, may require a great deal of effort, and still result in a large tax bill.
There comes a point where the complexity of the Estate and size of the likely tax
bill make the employment of financial professional justified. There are tax
professionals who may understand the finer points of the relevant legislation well
enough to argue the case for a lower tax bill. Where this point lies will vary with
the ability and energies of the individual, and as such must be a personal
decision.
My approach to this guidebook has been to touch on all the aspects of
inheritance tax that HMRC list in their core form (IHT 400 – more on this later),
but inevitably this has to be a fairly superficial level because often the devil is in
the detail, and this means that bespoke tax advice that covers every possible
situation is not practical. Moreover, there are aspects of inheritance tax that
may require very niche and specialist advice, a depth of knowledge that can only
be maintained by regular active work in this specialist area. This means there
will be areas where my own knowledge and experience is not sufficient to
comment, and in such cases I will advise that specialist professional advice
should at least be contemplated.
Inheritance tax and Probate are typically considered together in guidebooks
because the two processes are potentially somewhat intertwined, certainly both
only arise when dealing the Estate of someone who has died. The two processes
will be discussed in more detail later, but for the purposes of introduction it is
worth noting that inheritance tax and Probate are discrete processes. Each has
its own separate forms and rules, and each is administered by different
Government department, HMRC (His Majesties Revenue and Customs) in the
case on inheritance tax, and HMCTS (His Majesties Courts and Tribunals Service)
in the case of Probate. Depending on the nature of the Estate, it may be
necessary to deal with neither, just one, or both of these. This guidebook has
been written to cover the scenario of needing to engage with both.
Because there are two substantial, distinct processes to deal with, this guidebook
naturally divides into two parts, the first focused on the practicalities of
inheritance tax, the second on Probate. However before these two prime
subjects are approached, there will first be discussion of some overarching
themes that useful for both inheritance tax and Probate.
Who This Book is For

While this book may be of interest to anyone seeking to learn more about the
management of inheritance tax and probate, it has primarily been written for the
Executor of the estate of the person who has died. While there can be, and often
is, more than one Executor, for simplicity of writing the singular term will be used
through this guide.
The Executor is the person the deceased has named in their Will. It is a big
responsibility that brings with it a legal responsibility to act in accordance with
the wishes of the deceased for financial arrangements that have been recorded
in the Will or any legally binding codicils (additional requests added on to the
original Will).
The Executor can be open to legal action from individuals or organisations who
believe they have not received the money they are owed. Similarly, if there any
problems with the inheritance tax work, it is the Executor who is on the hook for
any mistakes that result in an underpayment or non-payment of the tax due.
An important role like this may not be everyone, though you should at least take
some confidence that the deceased had more confidence in you than anyone
else if they named you as Executor. The personal qualities that are helpful in the
role of Executor include:
 Honesty. You will potentially be managing large sums of money owed to
other people. It’s no sin to be tempted to misappropriate the money you
are controlling, but it is a sin to succumb to temptation. If you think you
lack the honesty for the role, do everyone a favour and pass the role over
to someone else.
 Industrious and hard working. The scale of the task varies with the
complexity and value of the estate but this is potentially a demanding role
in terms of gathering information and dealing with the necessary
organisations. The Government departments and financial organisations
you need to deal with are reactive. They will not take the initiative to
drive the process forwards, this is dependent upon you. You will need to
be committed and tenacious over many months.
 Well organised. There may be a lot of information to keep track of, much
of which may have to be recorded to provide an evidence trail for the tax
authorities and the beneficiaries. A chaotic and disorganised person might
easily lose track of what is happening, or indeed lose important
documents entirely, leading to costly mistakes and delays to the process.
 Persistent. These days the larger financial organisations often have
dedicated bereavement services, and that has probably improved
customer experience, meaning that many, perhaps even most inheritance
tax and Probate processes proceed in the way they are supposed to, with
everyone fulfilling their role competently. However, some of the people
and organisations you deal with may not respond to your legitimate
requests, or respond with incomplete or incorrect information. A person
who quickly gives up in the face of adversity could become unstuck in
these circumstances. You may need to chase organisations multiple times
 and perhaps even use formal complaint processes to drive people to the
necessary action.
 Reasonably good with numbers. The maths involved in this process
are not hard. You were probably taught the necessary maths in primary
school, but there can be a lot of numbers to manage. The quantity of
numbers and their attachment to legal language is arguably a bigger
challenge than the maths. You may have to talk to organisations about
these numbers and use them to complete forms, inserting the right
number in the right box.
 Good with detail. Depending on the size and complexity of the estate,
there may be many forms to be completed with lots of questions. The
inheritance tax and Probate processes reward attention to detail and
punishes sloppiness. If the forms are not completed correctly you will
either have to do them again, creating a time delay and adding to your
stress levels, or you may open yourself to legal challenge. If you have a
history of being sloppy with your written work it could be a good idea to
pay a professional to help with this process.
If there is no Will, the Will has been poorly constructed, perhaps not even naming
an Executor, or the named Executors decline the role, whoever is stepping
forward to manage the estate, usually a relative, will need to apply for Letters of
Administration. If there is a Will but the named Executors are unwilling or unable
to act, a beneficiary who steps forward to act as Administrator would apply for
Grant of Letters of Administration with Will Annexed.
As you might imagine, there are rules about who can obtain the Letters of
Administration. We don’t want a system where anyone and everyone can apply
to manage the financial affairs of the Estate. You can apply for Letters of
Administration if:
 You have been left the entire estate in the Will, provided there are no
Executors acting.
 If there is no Will, an order or priority applies based on the relationship to
the deceased as follows – first, the wife or civil partner; second, child;
third, grandchild; fourth, parent; fifth, nephew or niece; finally, another
relative. If you find yourself pursuing Administration without being a
relative of the deceased, contact the Probate helpline for advice.
The process of obtaining Letters of Administration can be obtained by reading
the ‘apply for probate if there is not a will’ section on the Gov.uk website.
Administration gives broadly the same powers as an Executor, so for simplicity
the term ‘Executor’ will be used going forwards.
Though the powers are similar, there is one important difference because the
Executor has the terms of a Will to guide them but the Administrator may not. In
such circumstances they must distribute assets under the rules of intestacy. The
law of intestacy sets out a prioritisation as follows: spouse, children, parents,
siblings, half-siblings, grandparents, uncles and aunts, the Government.
However matters are complicated by the fact caveats and formula applies as to
who get how much in certain circumstances, moreover these rules are subject to
change at short notice by the Government, such that it is probably not helpful to
set them out in detail here. It will be more helpful to consult the relevant site
online at www.gov.uk/inherits-someone-dies-without-will, where you are guided
through the outcomes based on your own scenario and the prevailing rules
This guide has been written from a UK perspective, which is to say England,
Wales, Northern Ireland, and Scotland. The inheritance tax and Probate
processes apply in each nation, but it is important to note that the finer details
can vary significantly depending on where you live. Because I live in England I
have only completed the process from that perspective and am less familiar with
the quirks that can arise in other nations, though I can see from the forms that
such differences are built into the process. Wales has closest rules to England,
with few and minor differences. Northern Ireland has a few more processes
differences than Wales. Scotland has the greatest differences. At the time of
Union, Scotland had its own separate and highly evolved legal system and this
separateness continued after Union. An Executor managing an Estate in
Scotland will potentially need to pay inheritance tax and apply for Probate as set
out in the guide, but the Executor should be alert to the fact that the terminology
and processes may differ significantly at times, for example the term
‘Confirmation’ is used instead of Probate in Scotland. The best defence against
these differences is to read the inheritance tax and Probate forms, or their online
equivalents, thoroughly. These should ask about the nation you are applying
from and direct you to the necessary sections and forms where these differences
are managed. These differences also means that if you are dealing with a
Scottish Estate and seek professional advice, it is probably best to take this
advice from a firm based in Scotland.
The Purpose of Inheritance Tax and Probate

So far we have touched on the terms ‘Inheritance Tax’ and ‘Probate’ but not yet
defined them.
When someone dies, if they have left a Will, it should name one of more
Executors. While the Executor has a number of formal roles, for the purposes of
this guide, their most important job is to manage the Estate of the person who
has died.
The Estate comprises all the assets and liabilities of the person who has died.
The assets have a positive financial value to the Estate, and may include:
 cash in bank accounts
 cash in physical form (under the mattress, in a safe, down the back of the
sofa, or wherever it may be found).
 Bonds, including Premium Bonds and other savings products
 Insurance products such as life insurance or pension policies, especially if
these will continue to pay out to a relative after the death. Note that there
may be certain trust arrangements that mean inheritance tax is not due –
check with the provider, or else seek financial advice.
 Shares
 Paintings, antiques, jewellery, machinery
 Vehicles
 Property, including the obvious things like flats, bungalows, and houses,
but could include things like beach huts.
 Land
 Full or part ownership of a business.
 Anything else of financial value
The liabilities have a negative financial value to the Estate any may include:
 Mortgage or other debt secured on property owned by the person who
died
 Personal loans
 Leasing or HP obligations
 Unpaid bills (e.g. utility companies)
The Executor must become something of a detective to find all the relevant
documents and speak to the relevant people to build up this financial picture of
the Estate. Once the assets and liability totals have been calculated, the
liabilities are deducted from the assets to give the value of the Estate.
Inheritance Tax is then applied at 40% on the value of the Estate, payable to
His Majesty’s Revenue & Customs (HMRC). The good news is that various
exemptions and deductions are available that, depending on the amounts
involved, will either reduce the tax bill, eliminate it completely, or even mean
that Inheritance Tax work can be ignored, with no contact with HMRC required at
all. The detail of this is explored in the later chapter.
The Executor is called upon to manage the Estate without being the legal owner
of the assets and liabilities. Quite rightly, banks and other organisations will not
wish to give out personal information or allow anyone to move money or assets
around just because they say they are an Executor. In order to provide the
Executors with the legal powers they need to act on behalf of the Estate, the
Government has created a system called Probate.
While Inheritance Tax is managed by HMRC, Probate is managed by a different
Government department, His Majesty’s Courts and Tribunal Service (HMCTS).
This means two different application processes need to be completed on different
Government systems that overlap somewhat but do not directly talk to each
other without your input. The two processes become most interlinked when the
size of the Estate means that inheritance is potentially due, or the absence of a
payment needs to be proven, because, unless certain conditions apply, HMCTS
will not issue the Grant of Probate if HMRC have not confirmed the inheritance
tax status.
The Grant of Probate is a very powerful tool for the Executor as it will allow them
to perform actions such as taking control of bank accounts and selling property. If
the Estate includes property or large amounts of cash in bank accounts the
Executors will almost certainly not be able to complete their work until Probate
has been granted.
The purpose of this guide is to explore the detail of these two, Inheritance Tax
and Probate, but first it is useful to note the actions to take following the death,
some of which must be completed before the Inheritance Tax and Probate can be
started.
Registering the Death

The death of someone can be difficult to cope with for many reasons. If you are
reading this guide, it may be that you, like many others, find taking practical
steps to manage the situation to be a welcome distraction, or at least provide a
feeling of moving forwards. As this is a practical guide, I will try and avoid text
that attempts to tug at the heart strings, but I hope the reader will find no
disrespect in what can obviously be a deeply emotionally charged time.
In a sense, the people involved in these arrangements are called upon to be at
their best when things are at their worst. Friends and families can fracture under
the intense pressure the death and subsequent arrangements bring. These
fractures can last a lifetime, destroying relationships, and it is hard to imagine
that is what the deceased would have wanted. Though the challenge may be
extreme, the more people can contain the negativity of the time and seek
positive outcomes, the better things will likely be in the long run. The Inheritance
Tax and Probate work that is to come can be demanding in terms of time and
energy, so the more people helping with good will towards each other, the better
the likely outcome.
The first actions depend on where the person has died. If they have died in
hospital, in practical terms, it can make things easier because there will be a
doctor present to confirm the cause of death. The hospital will usually have a
mortuary where the body can be kept until arrangements are made with an
undertaker.
If the person died at home, a doctor should be called to confirm the cause of
death. Confirm with the doctor which Registry Office they are sending the
medical certificate to and how long they expect it to take to arrive. An
undertaker will then need to take the body to a mortuary where it can be kept
safe until the funeral. If you are able to locate the Will, it may be the deceased
has already specified which undertaker they wish to be used.
You can only register the death at a Registry Office. In England and Wales the
Registrar should be informed within 5 days of the death. If you need help finding
the appropriate Registry Office, the Government offers a search based on post
code – see www.gov.uk/register-offices.
In order to register the death, you will need to be one of the following:
 A relative who either lives nearby or was present at or near the time of
death.
 Present at the death, even if you are not a relative.
 A person in authority in the building where the death took place (e.g.
owner of a nursing home).
 Living in a building with the deceased.
 The person arranging the funeral.
 The police (if the body is unidentified).
The person taking on this role is known as the informant. Once an appointment
has been made with the Registrar you will need to bring the medical certificate
that details the cause of death (unless already provided to the Registrar by the
Doctor, as noted above). While the medical certificate is the crucial document,
additional useful information includes the deceased’s Birth Certificate, proof of
name (e.g. passport), address (e.g. utility bill), and National Insurance Number.
The interview will normally take 30 – 45 minutes and include questions about the
occupation of the deceased, the date and place of death, surviving partners and
children, and Government pensions and benefits. Check the information listed
carefully before you sign agreement.
The Registrar should provide details of the Government’s ‘Tell Us Once’ service
that allows most Government departments to be notified through one online
form. If not, the service can be accessed at
www.gov.uk/after-a-death/organisations-you-need-to-contact-and-tell-us-once.
Provided the Registrar is satisfied with the information provided, they will provide
you with the Death Certificate and ask if you would like additional copies. The
answer is almost certainly ‘yes’ because a single piece of A4 paper is easy to
lose, and you will potentially need multiple copies to deal with different
organisations through the Inheritance Tax and Probate process. You can get more
copies from the Registrar later, but it will be more time consuming and
expensive. The more useful question is probably ‘how many copies are enough?’
I suggest 4 as a minimum but if you know for sure that the deceased has
accounts with many different financial organisations, then you might need more.
If you can afford it, it probably makes sense to get a couple more than you think
you will need to avoid the hassle of having to get more later. At the time of
writing the cost is £11 per copy. Note that most, if not all, of the organisations
you will deal with later in this process will not accept photocopies of the Death
Certificate.
As we shall see later, the Death Certificate is a powerful document. There are
certain steps in the process that cannot be started without a Death Certificate,
and it may allow you access to some of the funds of the deceased. This means
you don’t want it falling into the wrong hands. Keep it safe and secure.
The Registrar should also give you a Certificate of Burial or Cremation, also
known at the ‘Green Form’. The funeral director will need this in order to proceed
with their work, so this is another document to keep safe.
The rules in Scotland are broadly similar but have more flexibility on the timeline
for reporting, up to 8 days, rather than 5.
If the death occurred abroad it should be first registered in that country.
Depending on the size of their office in that country, the British Embassy or
Consul should be able to help register the death.
While the ‘Tell us Once’ service noted above is extremely useful, there will likely
be many other organisations that need to be informed. A priority is probably
banks and similar financial organisations so that they can freeze the account and
stop future payments until arrangements can be made for Probate. The
deceased solicitor and doctor should probably follow, if you they had one and
you can find the details.
Initial Financial Detective Work

The next logical step after registering the death would be the funeral
arrangements, however since the funeral can potentially involve a big financial
cost, it is worth taking a brief detour to consider the financial arrangement of the
deceased.
Some people take steps to pay for their funeral arrangements in advance. In
these circumstances one would hope the deceased has briefed the relevant
people in advance, but life can sometimes be messy, mistakes can be made, and
things can be forgotten, so you may have to proactively determine if such
arrangement have been made through your own detective work.
Once the death has been registered it will be useful to go through any paperwork
of the deceased that you have access to. The following items will be of particular
interest and make life much easier if you can find them:
 The Will (if you can’t find it amongst the deceased’s papers, it may be held
by their solicitor, or less commonly their bank).
 Codicils to the Will – additional instructions to the original Will that have
been properly signed and witnessed.
 Funeral plans or preferred funeral arrangements
 Bank or Building Society accounts
 Life insurance policies
 Share certificates and similar financial investments
 Savings bonds
 Property deeds and mortgage documents
 Details of significant building or electrical works, including repairs
 Warranties for any building work, boilers, electrical items
 Utility bills
 Debts
Much of this information will come into play later in the process, but for the
present time it is useful to note that banks and building societies should have a
policy of paying the funeral costs from savings of the deceased, provided there is
enough money in the account, you can provide evidence of the costs, and you
can provide the Death Certificate.
Each financial organisation has their own policy and ways of being contacted.
Because this information can change at short notice it is as well to Google
‘Bereavement Service of [name of bank or building society] to obtain the latest
information. If there is a branch nearby it is usually possible to begin the work
there, though they will usually refer you on to their central Bereavement Service
to complete the process. If there is no branch nearby, there should be a
telephone service option.
This process will likely be much smoother if you are named as an Executor in the
Will, and can show the Will as evidence. If you are not the Executor, you may
have to leave this work to the person who is, or else speak to the financial
organisation’s staff to find out how their process works in your own particular
circumstances.
The average funeral cost is about £5,000, but can be much more, so it can be
very useful for cash flow purposes to have this paid from the Estate in advance.
Alternatively, the Executor can pay the costs themselves, keep a receipt, and
then pay themselves back out of the Estate at a later date. Note that if the next
of kin are claiming Government benefits, it may be possible to get financial help
with the loan.
The funeral arrangements themselves will likely take up the time and energy of
those involved in the inheritance tax and Probate process, and it is probably as
well to switch off from financial and legal arrangements through this time. Once
the funeral is complete and you feel you have the necessary energy to return to
the process, it will be time to think about inheritance tax and Probate. Of the
two tasks, inheritance tax is the usually the most helpful one to consider first.
Valuing the Estate for Inheritance Tax

Your first task is to value the estate. To do this you need to create a set of simple
accounts, using the detective skills noted earlier. While this might sound a little
intimidating for those with no financial training, in practice the maths are not
hard. The greater challenge is probably tracking down the necessary information
on which to perform the maths.
The initial figure that is useful to keep in mind in the early stages of the
inheritance tax work is £325,000, the value of the inheritance tax threshold at
the time of writing in 2024, though subject to change in the future. If the Estate
is valued below the threshold there will usually be no inheritance tax to pay.
Even if the Estate is above the threshold, as we shall see later, there are still
potential options to reduce or eliminate the tax bill.
To recap, the Estate comprises all the assets and liabilities of the person who has
died. The assets have a positive financial value to the Estate, and may include:
 cash in bank accounts
 cash in physical form (under the mattress, in a safe, down the back of the
sofa, or wherever it may be.
 Bonds, including Premium Bonds and other savings products
 Insurance products such as life insurance or pension policies, especially if
these will continue to pay out to a relative after the death. Note that there
may be certain trust arrangements that mean inheritance tax is not due –
check with the provider, or else seek financial advice.
 Wages or benefits due up to the date of death but not yet paid
 Shares
 Paintings, antiques, jewellery, machinery
 Vehicles
 Property, including the obvious things like flats, bungalows, and houses,
but could potentially include things like beach huts. Be sure to clarify the
ownership structure, as whether the deceased fully or partially owned
property, and who they shared ownership with could be important.
 Land
 Full or part ownership of a business.
 Anything else of financial value
 Gifts of any of the above in the 7 years before death (see the paragraph
below for more on gifting).
Note that £3,000 can be gifted each tax year and be exempt from inheritance
tax. Unused gift exemption will roll over but only for one year, hence there could
potentially be £6,000 of exemption available in a given year. A separate gifting
allowance for weddings also applies - £5,000 to a child, £2,500 to a grandchild or
great grandchild, and £1000 to any other person. It may also be possible to
make ‘normal payments out of income’, provided that certain conditions are met,
including not diminishing the underlying capital. See the Government
inheritance tax gifts website for more details – www.gov.uk/inheritance-tax/gifts.
Since the limits listed in this paragraph are also subject to change by the
Government, this website will also provide you with the latest amounts.
Remember that a couple will each have their own gifting allowance and so a
single recipient could potentially receive double the amounts listed, if both
partners make the same gift. Gifts between spouses are exempt.
The liabilities have a negative financial value to the Estate any may include:
 Mortgage or other debt secured on property owned by the person who
died
 Personal loans
 Leasing or HP obligations
 Unpaid bills
I suggest creating a simple spreadsheet with assets in one column and liabilities
in the other. Subtracting the liabilities from the assets will give you a working
value of the estate that you can use for inheritance tax purposes. You may be
called on to provide this set of accounts as evidence later, so make sure you
keep a record, paper as well as computer.
Some of the valuations listed above will be easier than others. At the easier end,
bank accounts and bonds will have a value stated, though beware that unpaid
interest may also have to be factored in. Other items may need a professional
valuation. Estate agents will usually value a property for free, though you can
research the value yourself based on recent sales of similar properties. Best
practice is to get two or three valuations from different agents. This is less
important if the Executor is also the beneficiary. If you are acting for other
beneficiaries they may potentially question your valuation and it is easier to
defend with multiple professional valuations.
Other items such as jewellery, painting, and antiques may also need professional
valuation. An auctioneer is probably your best bet in these circumstances. It is
usually possible to obtain a free valuation estimate.
There is nothing to stop the Executor making their valuation of the assets
without professional help. Be aware that if you to do so, you are potentially
opening yourself to legal challenge and financial penalties if your valuation is
significantly below the value actually realised or confirmed later. If in doubt, it’s
likely worth the upfront time and effort to get the professional valuation, which of
course should be kept as a record.
The most volatile of the assets listed above are shares quoted on the stock
market, the value of which can change day by day, or even minute by minute.
How on earth is the hapless Executor to provide a valuation for an asset that can
change so quickly? The answer is that you use the value on the day the person
died. For this reason it can be useful to buy a newspaper that provides share
prices (not all do) on the date of death. Failing this, there are many online
resources that track share price over time. To work out the value you need to
multiply the share value (usually a few pounds or pence) by the number of
shares held. Further useful guidance is provided at www.gov.uk/valuing-stocks-
and-shares-for-inheritance-tax.
Years ago, most individuals held shares in paper certificate form. Over the years
it has become more expensive and difficult to deal in paper certificates, so many
investors have moved to online ‘nominee’ accounts where the shares are held by
a company on behalf of the individual. If this is the case there may be no paper
record of what the deceased held and you will need to contact the company for
details.
If there are life insurance policies or similar financial products, contact the
company directly to confirm the value and payment policy, including the
evidence and documents required. If you are lucky your financial detective work
may uncover a document that specifies exactly what you need to do. If not, it is
probably best to telephone the helpline of the organisation to track down the
relevant details and any supporting evidence that is needed to make a claim.

Valuing Debts and Liabilities

If you are lucky, the estate has no debt to settle, except perhaps a few
outstanding utility bills. If there is debt to manage, tread carefully because the
Executor may be personally liable for any mismanagement.
As with the assets, some detective work is required, going through paperwork
and speaking to people close to the deceased to find out if they owe money to
people or organisations. It is very likely that at least a small amount of money
will be owed to the utility companies (water, electricity, gas etc). Other common
debts to look out for include mortgages, loans, credit card bills, and tax bills.
Each organisation will have their own policy for dealing with money owed in
these circumstances, so it is a question of contacting them to obtain details. Be
prepared for varying levels of service in these circumstances. The larger
organisations will probably have dedicated bereavement teams who have been
trained in how to deal with people who are grieving. Other organisations may not
have these teams and you may not get the sympathy and careful use of
language you would hope for or expect in these circumstances. Even if there is a
dedicated bereavement team, the quality of service may be patchy, with delays
and people not doing what they said they would do. For example while you may
be told that the deceased’s utility bills will be sent to your home address, in
practice this may not happen.
The people owed money may look to the Executor to pay it back from the Estate.
It may be there is not enough money in the Estate to pay the money owed, and
even if there is enough money there could be a cash flow problem because it
may take months until the Executor can access the money in the Estate. In these
circumstances honest communication with the people and organisations owed
money is probably the best approach.
For smaller amounts of money, such as utility bills, it may be the Executor feels
able to pay themselves, effectively transferring the debt, because the Executor
themselves is now owed money rather than the utility company. Since you will be
controlling the Estate, it will likely be easy enough to pay yourself back out of the
Estate later, once you have access to the money, but be sure to keep accurate
records, supported by receipts, as you could be open to legal challenge for
misuse of the funds.
Since there is only so far personal detective work can take you, best practice is
arguably to advertise the death in both a local newspaper, and The London
Gazette. The purpose of these adverts is to give parties the opportunity to come
forward with a claim against the Estate, on the understanding it will be harder to
legally enforce a claim later in time if no parties came forward in response to this
advert. Such adverts should contain the name and address of the deceased,
plus a contact address if those reading the advert wish to pursue a claim.
Include a deadline for claims to be made, for example 2 months from the date of
the advert.
Executors in Northern Ireland can achieve the same purpose by advertising in
the Belfast Gazette, but in Scotland the Executors are not expected to take the
initiative, rather it is up the people owed money to come forward and identify
themselves.
There is no legal requirement to make such an advert but this action may be
judged especially important if you are an Executor but not a beneficiary (people
who will receive money or assets from the Estate). If parties come forward with
claims against the Estate later in time, they can still attempt to enforce this
claim against the beneficiaries. This means that placing the advert offers little
protection to the beneficiaries. On the other hand, if no such adverts have been
placed, claims can be made against the Executor rather than the beneficiaries,
and so the advert creates a legal protection for you.
If parties do come forward in response to these adverts, the Executor has a duty
to weigh their validity. If someone phones in response to your advert and says, ‘I
was owed a million pounds’, that is probably not going to be enough to act on.
You will need to seek as much evidence as possible to support such claims, and
potentially take your own specialist legal advice on the validity of the claim. For
a formal debt there should probably be a signed credit agreement.
Though I have no specific details on how much fraud takes place in these
circumstances, it seems to me that an open invitation to the general public to
make a claim for money against an Estate could be of interest to fraudsters. If in
doubt, seek professional legal advice.

Estate Valuation Calculation

Once you have the picture completed of assets and debts, albeit perhaps partly
painted with estimates, you can proceed to value the Estate for Inheritance Tax
purposes. A simple Excel spreadsheet is your friend for these purposes.
Add the assets together in one column, the debts in another column. Deduct the
liabilities from the assets to give a working value for the Estate, noting that this
might change once the estimated figures change into actual values, for example
once a property has been sold.
The details will vary with the circumstances of the Estate, but the table below
provides a worked example.

Assets Debts / Liabilities

House – agent valuation of £300,000 Mortgage - £100,000

Cash Bank loans - £5,000

 Found in the property £200
 Bank accounts £20,000
  (Total cash = £200 + £20,000 =
£20,200)

Premium Bonds £20,000 Unpaid credit card bill - £200

Shares Unpaid utility bills

 10,000 Lloyds Bank @50p per  Water £100
share = £5000  Electricity £300
 1,000 Tesco @£3.00 per share  Gas £500
= £3,000  (Total unpaid utility bills = £100
 (Total shares = £5,000 + + £300 + £500 = £800)
£3,000 = £8,000)

Car – online auction estimated Funeral costs £5,000

valuation £5,000

Total assets = £300,000 property + Total debts / liabilities = £100,000

£20,200 cash + £20,000 bonds + mortgage + £5,000 loans + £200
£8,000 shares + £5,000 car = credit card + £800 utility bills +
£353,200 £5,000 funeral costs = £111,000

Estimated Net Estate value = £353,200 assets - £111,000 debts =

£242,200

Your own calculations may look similar to this or totally different. You could have
life insurance policies on the asset side, or a share in a business venture. It could
be you even end up with a negative valuation, if the debts are greater than the
assets.
A negative value is a legitimate outcome for the Estate valuation, though it does
indicate there will not be enough assets to pay all the debts. In this situation the
Estate is called insolvent, and that there will need to be some careful
negotiation over who gets what, guided by the contractual terms of the debt. If
the there is a mortgage for instance, it will usually be secured on the property
and have a legally enforceable claim on the value of this asset. See the later
section on ‘Inheritance Tax Scenarios’ for how to manage an insolvent Estate.
The purpose of the table is to show the general approach of totalling assets and
debts separately, listing each with a reasonable amount of detail, then bringing
them together for an overall Estate estimate.
Inheritance Tax Thresholds and Scenarios

Once you have your Estate valuation you are in a position to make an
assessment of the different inheritance tax scenarios and see which one best fits
your situation.
After the funeral expenses have been paid, HMRC have the next claim on the
Estate, and this means any inheritance tax due must be paid before creditors
(people owed money by the Estate), with the beneficiaries ranking behind the
creditors in order of priority.
Since this guide is being written in 2024, it is assumed you are not dealing with a
death that occurred before 31 st December 2021. In the unlikely event you are
dealing with such an Estate, consult the Government website for guidance as
different rules will apply.
HMRC provide each Estate with an allowance called the ‘nil rate band’. It is
called ‘nil rate’ because zero inheritance tax is charged up to this limit.
The Government may choose to change its policy on where the nil rate band is
set. For many years before 2009 the nil rate band was increased each year,
however from 6th April 2009 the nil rate band was set at £325,000 and has not
been increased in the past 15 years. An Estate value that falls in the nil rate
band is sometimes called an ‘excepted estate’.
The nil rate band is not the only allowance or relief. There is also a taper relief on
the tax of gift, a Business Relief, and Agricultural Relief. However, for most
people, the additional allowance most likely to be used is the Residents Nil Rate
Band, not to be confused with the nil rate band itself.
The residents nil Rate band (RNRB) is £175,000 at the time of writing. It was
introduced in 2017, arguably in response to rising property values that were
leading to higher tax bills after the nil rate band was frozen in 2009. Provided the
Estate is worth less than £2,000,000, and the deceased left their home to
children (including adopted or fostered), or grandchildren, the RNRB means that
an Estate of £500,000 (£325,000 nil rate band + £175,000 RNRB = £500,000)
should have no inheritance tax to pay.
Executors should be aware that unused inheritance tax allowances automatically
transfer between spouses. If, for example, a husband dies and leaves everything
to his wife, his allowances remain used and will transfer to the wife. If the wife
then leaves a home to a surviving child, the Estate will have access to the usual
nil rate band + RNRB of £500,000, plus the husband’s similar unused allowances,
potentially making for a combined £1,000,000 that the Executors can use to
reduce or remove the inheritance tax bill.
Be aware that the RNRB cannot be claimed ‘off the books’, nor is it enough to
write a letter to HMRC and let them know you are claiming the RNRB.
Unfortunately, you must go through the usual process of completing and
submitting the formal inheritance tax forms that will be discussed later, even if
there is no tax to pay.
If you have calculated that use of the RNRB means you have no inheritance tax
to pay, and thus attempt to skip this stage and proceed to Probate, your Probate
application will likely be held up because you are not an Exempt Estate (i.e. the
Estate assets are not under £325,000) and thus HMCTS, who administer the
Probate service, will want to be sure there is no problem with the inheritance tax
before they start their own work. The mechanics of this are covered later in the
chapter on Probate.
To recap, for most people, the most common scenarios will be:
 Estate value calculated is below £325,000 (Excepted Estate).
Usually, no inheritance tax should be payable and you may proceed to the
Probate application (covered in a later chapter), however keep the Estate
valuation you made as you may be called up to use it as evidence, and it
may also help you in the Probate application.
 Entire Estate has been left to a spouse or civil partner. Provided
everything has been left to a spouse or civil partner, there should be no
inheritance tax to pay and you should not usually need to complete the
inheritance tax form IHT400 to make your case to HMRC. While such a
case will usually be straightforward, complexities could potentially creep in
if there is doubt in the Will over who has been left what. Wills can contain
caveats that may be difficult to interpret. Take professional advice if in
doubt. Probate may still be needed, depending on the circumstances,
especially if accounts are not held in a joint name. See the later chapter
on Probate for more details.
 Estate value over £325,000. For many people the RNRB will mean
there is no tax to pay, but for others the RNRB will not be sufficient and
there will be an inheritance tax bill. Either way, even if you calculate there
is tax to pay, you should complete the inheritance tax forms and show
which allowances you are using. If you are drawing on the RNRB, be sure
to complete the necessary form to activate this claim (more on this later).
 Estate value over £2,000,000. The size of such an Estate means that
the RNRB cannot be used, and you will likely be facing an inheritance tax
bill. There still could be other reliefs for you to draw on if a business or
agricultural land form part of the estate. If so, it may be worth seeking
professional tax advice to see if it is possible to legally reduce the tax bill.
 Insolvent Estate. In this scenario the liabilities are worth more than the
assets, so there will not be enough money to pay out everyone with a
claim, and there will be no money for beneficiaries. In such a scenario,
while there may be a temptation to pay out to those who should loudest,
or who seem in greatest need, there is a legal responsibility to pay out in a
set order of priority. If you break the order, those of higher priority may
bring a legal claim against you. The first priority is the mortgage secured
on Estate property. The second priority is government tax owed, such as
unpaid VAT, or capital gain tax. The third priority is unsecured creditors
(e.g. personal loans, credit card bills, utility bills), and they should each
get an equal share of any money that remains by the time the first and
second priority groups have been paid. Keep a clear record of how you are
accounting for these transactions, in case of challenge. On the positive
side, an insolvent Estate will at least have no inheritance tax to pay.
Moreover, if you are not being paid for the work, you may decide to turn
 the matter over to the creditors and let them apply for Letters of
Administration in order to recoup their money.

Tax law can change quickly, so it is always worth checking the latest guidance
from HMRC on their website. For example, at the time of writing, HMRC want you
to contact them if you fall into the following categories:
 a gift of £250,000 or more made 7 years before the death;
 giving of gifts with continuing benefit; estate value over £3,000,000;
 having ‘deemed domicile’ status;
 foreign assets over £100,000;
 living permanently outside the UK, having previously lived in the UK;
 life insurance that paid out to someone other than a spouse or civil
partner, and also had an annuity;
 increased pension payments while terminally ill if the pension would be
paid after death;
 property arrangements avoiding a pre-owned asset charge.
Some of these terms have a precise legal definition and the HMRC website
includes more details.
It is important to remember that inheritance tax has a claim on the Estate ahead
of beneficiaries. In other words, provided there is enough money in the Estate to
do so, you must pay any inheritance due before distributing money to the
beneficiaries.

Using Deed of Variation to Change the Will

Executors should be aware that a Deed of Variation can be used to vary the
terms of the Will, provided that all the adult beneficiaries agree. You may find,
for example, that increasing the amount left to a surviving spouse reduces or
eliminates the tax bill.
Though you can pay a lawyer to do this work for you, and you may prefer to do,
the system has been designed to allow the Executor to do so themselves. There
is a dedicated Government website that advises on how to make the change if
you want to do it yourself – www.gov.uk/alter-a-will-after-a-death .
Making an Inheritance Tax Submission

The preceding chapter has looked at valuing the Estate and deciding whether His
Majesties Revenue and Customs (HMRC) need to be informed. If you have come
to the judgement that HMRC do not need to be informed, you may wish to skip
this chapter and proceed to the chapter on Probate.
If you have calculated that you are not an Excepted Estate, then you need to get
acquainted with HMRC, their IHT400 form, and its supporting schedules.
Depending on the complexity of the Estate there may be many supporting
schedules to complete with information that will cross reference back to IHT400.
It pays to take your time and get the details correct, or else you risk long delays
as a result of HMRC rejecting the application or coming back to you with queries.
Assuming you don’t enjoy a delayed process and correspondence with a tax
authority, a ‘right first time’ focus and mentality should pay dividends in terms of
reduced stress levels and making the process as quick as possible, so you can
proceed to Probate.
Your goal in this process is to obtain a single piece of A4 paper. When in arrives
in the post it doesn’t look like much for all the time and effort that went into
obtaining it. However, until it does arrive your ability to proceed with Probate is
blocked. This HMRC letter will give you a code number that you will need for
Probate, so no code means no Probate application, or rather you can make a
Probate application but it will not proceed, and you will get tangled up with
explaining why you have applied with no code. The HMRC letter will also inform
you of an any inheritance tax due, and include a cut-off date after which you
may assume that HMRC have no further queries.
Given this guide is written in 2024, the assumption is made that you are dealing
with the Estate of someone who died after 1 st January 2022. In the unusual event
you are dealing with an Estate of someone who died in 2021 or earlier, contact
the HMRC helpline for confirmation of the process to be followed.
While it is possible to obtain the necessary forms in the post from HMRC, it will
save you a lot of time if you have access to a computer with internet access and
a printer of good enough quality that it will print without smudging the text and
numbers. If your printer is going to print a ‘2’ that looks like an ‘8’, it will likely
cause you enormous trouble and should find a better option.
Though you can apply with pen and paper, the HMRC forms are available in PDF
format and this will allow you to complete the forms neatly and make changes
without messy use of correction fluid or crossing out in pen. Your goal is to make
the forms as easy as possible for assessor at HMRC to read and understand, so
that they process your application without delay or the need to come back to you
for clarification. The neater and more accurate your work, the more likely you will
convince the assessor that they are dealing with someone competent, and thus
the less likely they will be to start asking questions that create time delays and
ongoing correspondence.
The inheritance tax submission comprises a core form, called IHT400, in which
the high-level details of the Estate are recorded. IHT400 will then direct the
Executor to complete a series of other forms, also referred to as ‘schedules’, as
necessary for the assets and liabilities in the Estate, and the actions that are
being performed, such as use of the nil rate band and residents nil rate band.
Each of these schedules sometimes has its own supporting guidance document
that can be useful. IHT400 references out to 25 different forms, but the forms
most people will use are probably:
 IHT404 – Jointly owned assets
 IHT405 - property
 IHT406 – bank and building society accounts
 IHT407 – household and personal goods
 IHT409 – pensions
 IHT410 – life assurance and annuities
 IHT411 – listed stocks and shares
 IHT416 – debts due the estate
 IHT419 – debts owed by the deceased
 IHT435 – claiming Residents Nil Rate Band
There are already supporting guidance documents for most of the schedules on
the HMRC website, but it may be helpful to touch on all of the schedules for the
purposes of completeness. Note that some scenarios involving business or
agricultural assets may need specialist professional tax advice that varies with
the details of the Estate in question, beyond the scope of this guide.

IHT400
This is the core inheritance form that connects all the supporting schedules and
references out to them. Take your time in making sure the information you record
is accurate and mistakes may be costly, if only in the time taken to rectify the
mistake.
Note that the form itself lists a telephone helpline – 0300 123 1072. When I used
this, to my surprise I was only on hold for 20 minutes, but it may be as well to be
psychologically prepared for a longer wait. The person I dealt with was
professional, proactively, and helpful. Well done HMRC. I did however need to
use some trial and error with the various answer machine number options to
connect to the right department who could handle the call.
The form leads off with information about the person who died, but then Q3
incongruously throws in a request for an Inheritance Tax Reference Number,
which may cause some confusion. A note at the top of the form gives the details
of how to obtain this number – note the 3 week turnaround time – so obtaining
this early should be a priority, if required. You only need a Tax Reference Number
if you have calculated there is inheritance tax to pay, however the note does not
say what to do if there is no tax to pay. While it may be sufficient to leave the
box blank, it may be as well to type in ‘no tax to pay’ to avoid any confusion. For
the avoidance of doubt, if there is no tax to pay, you don’t need to obtain the
Inheritance Tax Reference Number, and can thus save yourself 3 weeks of
waiting.
By the time Q17 rolls around, the questions have switched to ask about the
person dealing with the Estate. If you are reading this guide, the chances are this
is you, but remember to record the details of any other people carrying the same
responsibility, such as co-Executors, in the relevant section that comes later.
Q24 asks for a copy of the Will. While the Probate application that comes later
requires the original, HMRC only need a copy. Unless you are blessed with many
original copies of the Will, rarely the case, you can save yourself much potential
stress later by only sending HMRC a copy of the Will. If you’ve only one original
and HMRC lose it, or it gets lost in the post, you will have a more difficult time
later in the Probate process.
Q29 poses the question of which schedules to complete. Each of these is
discussed in more detail below. The more complex the Estate, the more varied its
assets, the more schedules you will need to complete. You will see these are
binary yes / no questions. If the answer is ‘no’ you can ignore that schedule for
the purposes of this submission.
At Q49, once you’ve completed all the calculations required in the different
schedules (or ruled them out as not relevant), the IHT400 form now draws you
back to make the inheritance tax calculation. There may be many of the boxes in
the calculation left blank if the schedule concerned is not relevant to you. If you
are using the PDF download version from the HMRC website, it has a built-in
calculator that will automatically do most of the calculations for you. While this is
welcome, I recommend checking all the calculations yourself, using your own
calculator.
By the time you have got to Q79 you will have the ‘gross value of the Estate’, i.e.
the value before any legitimate deductions are made. These recording of these
deductions (if any) follow on the next page. Note that funeral costs and a
headstone count as deductions. By the time you get to box 96, the deductions
should have been removed to give you the ‘total net estate value in the UK’.
Q97 onwards then requires ‘other assets’ to be added in, including foreign
assets. If there are none, leave these blank. Either way, you will eventually arrive
by Q108 at the ‘Total Chargeable Estate’, on which inheritance tax will be
charged. The following page then provides guidance on calculating the
inheritance tax payment itself.
The ‘Simple Inheritance Tax Calculation’ provides a chance to work out if there is
any tax to pay. Q111 gives you the opportunity to add in the Residents Nil Rate
Band, provided you qualify (see earlier comments in the guide on the relevant
criteria. Q115 then allows the nil rate band, probably £325,000 but check the
‘rates and tables’ as the note suggests, because it depends what year the person
died. If you are able to draw on the full £175,000, this, plus the nil rate band of
£325,000, for a combined £500,000, will likely be sufficient to avoid an
inheritance tax bill for many people, or at least substantially reduce the bill. If
you have a negative figure, just leave Q118 blank as there is no value on which
tax is charged. If you do have tax to pay, inheritance tax is charged at 40%.
Multiply Q118 by 40% to give the tax payable in Q119.
Stay focused as there are still a few key details to complete. Q121 asks about the
type of grant. If you’ve a Will, you would normally want Probate as the next
stage. If you’ve no Will, it would normally be the Letters of Administration
(similar powers to Probate) as the next stage. If you decide you won’t need either
of these but simply want HMRC to confirm your calculations (if only to have them
agree there is no tax), this is also given as an option.
Q121 also gives the option to note any provisional or estimated figures used in
the form. This seems a useful opportunity to give yourself some protection,
because there will often be assets, such as houses, the value of which can be
estimated, but will not be known for sure until sold. If you’ve got the value so
wrong (e.g. the house you estimated at £200,000 sells for £1,000,000) that it
impacts your inheritance tax bill, you will need to contact HMRC and advise them
of the change.
Q122 provides a useful opportunity to double check your work and ensure you
have printed out and completed all the necessary forms / schedules.
Ensure that anyone else (such as co-Executors) sign the declaration on page 14.
There follows another checklist that is worth paying attention to, and double
check you have not missed anything.
With our tour of IHT400 complete, let us look at each of the schedules in a little
more detail, though you may decide to skip over those not relevant to your own
application.

IHT401 – Foreign Domicile

This form will only be relevant to the Estate of those domiciled outside the UK
when they died. If the person was domiciled in the UK at any point in the last 3
years, IHT 401 is not completed.
Given the domicile status needs a detailed review by HMRC, be prepared for
additional delays and queries if this schedule is submitted. The decision on the
location of domicile is crucial to this process, because it determines which assets
get brought into scope for UK inheritance tax.
Note that you may need to assemble documentation to prove the claims being
made in this schedule. There may also be complexities involving, for example,
double taxation, that make specialist tax advice a good investment.

IHT402 – Transfer Unused Nil Rate Band

There are very particular circumstances in which the transfer of unused Nil Rate
Band can be applied for, and these are set out right at the top of form IHT 402.
The nature of the Estate finances and the family relationship must meet the
necessary criteria. In essence though, if the spouse or partner of the deceased
whose Estate you are managing died first, and did not use all of their Nil Rate
Band when their own inheritance tax work was completed, it may be possible to
transfer this unused allowance to the Estate you are managing.
There are extra complexities with IHT402, because there is a need to reference
back to the Estate of someone other than the Estate you are dealing with,
provided that this person meets the criteria for the transfer. Though there may
be considerable extra work, it can potentially save you a significant amount of
money by reducing or perhaps even eliminating your inheritance tax bill.
The schedule lists the information needed, advises of the calculations necessary,
and then at Q18 states the nil rate band available to transfer to the Estate that
you are managing. This is a little confusing, as there is still an additional
calculation to be performed using a percentage figure calculated on the basis of
the nil rate band in force when the first person died.
Note that transfer of unused Residents Nil Rate Band is managed through a
different schedule, IHT 436.

IHT403 - Gifts
One has to be careful when dealing with gifts of money or other valuables
because, depending on the timing and amount, they may still fall into scope for
inheritance tax. The purpose of these rules are to stop individuals avoiding
inheritance tax by gifting assets of value shortly before they die.
Not all gifts need to be declared. The IHT 403 form lists the exemptions at the
top of the first page. If there were no gifts, or their timing or value meets the
exemptions listed, there is no need to complete this form.
If gifts were made more than 7 years before death they are out of scope for
inheritance tax. If the gifts were made 7 years or less before death, a sliding
scale of taxation called ‘taper relief’ applies. You will see that later questions in
the form ask about the date of the gift, and it is important to get this right so
that the correct taper relief (or absence of it) is applied. Various other reliefs (e.g.
Q7) may apply, though you may need specialist tax advice to confirm eligibility,
or else a call to HMRC may be sufficient to resolve this question.

IHT404 – Jointly Owned Assets

The applicability of inheritance tax on jointly owned assets depends on the
relationship between the people involved, and potentially any contractual details
of the asset and how it is to be treated. A spouse or civil partner living in the UK
can inherit assets from a partner who has died without paying inheritance tax,
but the guidance notes on IHT404 request that the surviving partner still
complete the schedule, though on a stripped down basis (boxes 1 and 6, and
only columns A, B, F and G).
If you were not married to the person who died, and not a civil partnership with
them, the definition of what counts as ‘jointly owned’ may become more
complex, as may the calculation of the percentage share of the asset.
Jointly owned assets involving companies may prove especially complex, with
matters to be resolved the nature of the business, and the number of controlling
participators.
This schedule strikes me as potentially one of the more complex areas of
inheritance, so be careful not exceed the boundaries of your own competence
and get specialist advice if in doubt.
IHT405 - Property
The inclusion of property in an Estate is probably one of the most common
features. For most people the property in question will probably only be the
house that the deceased lived in, but will also include other property assets in
the Estate. If there are multiple properties, be sure to account for each one
separately as you work through this schedule. While a house is obviously
property, there could be some more unusual assets where the designation of
‘property’ will be more uncertain, and where perhaps even the legal definition
might change with time. If you are unsure, call HMRC for advice, or else seek
your own professional advice.
Q7 asks about the property in question. Column B asks for a description of the
property. There is no need to write chapter and verse or include the level of
detail that an estate agent would use. Something like ‘3 bed semi-detached with
small garden’ should suffice. However, if you are dealing with a property that
has a large amount of land attached, it is probably a good idea to specify the
size. e.g. one acre. Similarly any other unusual features that could be relevant to
the value should be noted.
Column G asks about the open market value, and it may prove helpful if this
estimate has come from a professional, such as an estate agent, rather than
your own valuation. There is nothing to stop you using your own valuation, but it
may be harder to defend if challenged. For the same reason you may wish to
obtain more than one valuation and take an average, especially if you think a
challenge is likely, perhaps from one of the beneficiaries.
Q9 asks about ‘special factors’. If, for example, the property has a low valuation
due to damage, but the damage can be made good by an insurance policy, and
thus the property be worth more in the future, the details should be recorded
here.
Q12 asks about property sale details. You may decide to keep the property. Be
aware that you may be exposed to capital gains tax on a future sale if the
property does not become your primary residence.
Column F asks ‘do you want to use the sale price as the value at the date of
death.’ You may potentially need to take specialist tax advice on this question
because the best answer will vary with your own personal circumstances. Capital
gains tax may come into play. If you value the property at £200,000 and it later
sells for £300,000, you have made a capital gain of £100,000 and may be taxed
accordingly. In order to avoid this outcome, the best action may be to elect for
the sale price to be used as the value at the date of death. On the face of it, this
should mean that no capital gains tax applies because you have, in effect, sold
the property for exactly it’s value and made no capital gain. If you believe this is
your best option, write ‘yes’, or ‘yes, when sold’, if the sale has yet to complete.
The reality of defending this position may prove different if there is large
increase in the sale value over your inheritance tax valuation estimate or if you
sell long after the person died. If in doubt, phone HMRC for confirmation, or seek
professional advice.
The only reason I can think of to write ‘no’ in column F is if you believe there is a
trade-off between capital gains tax and inheritance tax that works to your
advantage. Such a calculation is beyond the scope of this guide and you should
seek specialist tax advice if you feel you need further advice on this matter. This
also holds true if you are selling multiple properties, as the capital gains tax
picture could become more complex – seek professional advice on the best
actions.

IHT406 - Savings
This is probably the most common schedule to complete, as most Estates will
have some cash savings to record. Provided you have obtained all the necessary
information from banks and other financial organisations, this should be a
relatively straightforward schedule to complete because it is not subjective.
Remember to include the account and reference numbers requested. If these
are left blank it may create suspicion from the assessor at HMRC that you are
trying to obfuscate, drawing further questions and requests down upon yourself,
and generally make the process more stressful and time consuming than it
needed to be.

IHT407 – Household and Personal Goods

This is probably a very common schedule that will be relevant for most Estates.
Q1 asks about jewellery. Only items £1500 or over need be recorded. Obtaining a
professional valuation would seem wise for any such items in order to give a
defensible position if the valuation is questioned in the future. If you do decide
to obtain a valuation, get it in writing and keep a record. Note that the value is
set at the date of death, not at the time of completing the schedule.
Q2 asks about vehicles, boats and aircraft. The advice on professional valuations
probably applies here to. Note that for vehicles it is usually possible to obtain a
free and quick valuation from online auction sites, provided you have the
Registration Number, and a few other details, such as the mileage. These
valuations can be printed and kept as a record.
Q3 asks about antiques. It is similar to Q1, but in this case it does not provide the
cut-off value of £1,500, so on the face of it all such items in the named
categories should be included, regardless of value
Q4 allows for the ‘general sweep’ of other items in the house, such as furniture
and electrical items. If you are confident there is nothing of special value, it may
be as well to make your own rough estimate of the value, noting that second
hand electrical and furniture would normally be worth less than their original
purchase price, or perhaps even have no market value at all if they are in poor
condition.

IHT408 – Goods Donated to Charity

It is possible to obtain a charity exemption if certain items are donated to a
qualifying charity. The inference here of the word ‘qualifying’ is that you can’t
unilaterally declare your friends or relatives are ‘charities’ and donate valuable
items to them to avoid inheritance tax. IHT408 defines what qualifies as a charity
in the notes at the top. Also note that proof of receipt by the charity must be
included.
Note that if the deceased left items to a qualifying charity themselves, in their
Will, the items fall outside the scope of IHT408.
The amount you calculate in IHT408 must then be linked back to the relevant
section of IHT400 in order to claim the potential tax deduction – don’t forget the
receipts though, unless you enjoy lengthy delays and additional correspondence
with HMRC.

IHT409 - Pension
For inheritance tax purposes, HMRC are only interested in payments that have or
could potentially continue after death, because this is value that should be
added to the Estate. If there are no such payments, you will be able to proceed
rapidly through this form without having to include any detail, just ticking a few
boxes. You can see from the bullet points in Q1 that not all such payments need
to be noted.
I expect most people will be able to select ‘no’ to Q1, Q8, Q17, Q18, and Q22. If
so, there should be no need to record any of the specific details of the
pension(s). Otherwise, complete the questions as directed to assess how much
needs to be added to the Estate for inheritance purposes.

IHT410 – Life Assurance & Annuities

It is possible to buy financial products that pay out after death, such as life
assurance policies and annuities. These may form part of the Estate for
inheritance tax purposes, and the aim of IHT410 is to capture these.
The guidance notes at the top of IHT410 list the type of financial product HMRC
are interested in. Note that pension annuities are captured separately in IHT409,
as noted above.

IHT411 – Listed Stocks & Shares

The fact that these assets are ‘listed’ means they are tradeable in a stock
market, and have a value that is quoted by that market, such as the London
Stock Exchange (LSE). If you discover any paper share or unit trust certificates,
or evidence that these are held online, most likely these will be the sort of listed
assets that are relevant for IHT411.
The maths involved in IHT411 are not hard, but there may need to be some
financial detective work to track down the information required. If the stock or
shares are held online by a broker, you will need to contact them to establish
what assets are held.
A further complication is that the value of listed assets can change day by day,
or even minutes by minute if there is a lot of trade in the company, and this is
typical of the larger companies that people are more likely to hold. How is the
hapless Executor to place a value on something that changes so quickly? The
answer is that you use the closing price at the date of death. For this reason, it
may prove useful to buy a newspaper on the day of death such at the Financial
Times, that provides share prices for the larger companies and unit trusts. If you
don’t remember on the day, and let’s face it most people will probably have
more pressing concerns, it may be possible to obtain the newspaper by other
means. These days there are also many websites that provide charts of share
prices over time, and a Google search may be sufficient. How ever you obtain the
proof, make sure you keep a copy as evidence in case of future challenge by
HMRC or another party.
Once you’ve found the value of the share or other asset on the correct day,
simply multiply by the number of shares held to obtain the value of the asset. Of
course, if shares are held in multiple companies, the calculation will have to be
performed for each one.
If the company, or stock, pays a dividend (not all do), and this has yet be
received, the value needs to be captured in IHT411, in much the same way that
interest due on savings accounts must be added. Most of the larger companies
will list their dividend timetable online, probably under the heading of ‘Financial
Calendar’ or ‘Investor Relations’ and you can use this check the status of
dividend payments.
In the unlikely event (IHT411 itself describes such an event as ‘extremely rare’)
the deceased owned so many shares in the company they had a controlling
interest, you are advised to use IHT412 instead. On the face of it, owning over
50% of the shares in a company would give a controlling interest, but corporate
affairs can be complex and throw up surprises, so seek professional tax advice if
necessary.

IHT412 – Unlisted Stocks & Shares

Not all stocks and shares are listed on an open market. These assets will be rarer
than listed shares. Few people will hold unlisted shares but the purpose of
IHT412 is to capture the value of these assets.
The decision of whether a share is listed or not is made by HMRC, based on
whether they think the market qualifies or not. As a broad rule, if you can’t find
the price of your share in a newspaper or quoted online, it may be worth calling
HMRC to clarify.
The fact that unlisted shares do not have a readily available value quoted on a
market may make them much more difficult to value. Difficult though the task
may be, what won’t wash with HMRC is declaring the task too difficult and
entering no value at all. It may be the company themselves can supply a value,
based on their current profitability. A conversation with HMRC or specialist tax
advice could be useful if you hold these assets, especially when you consider it
may be possible to obtain Business Relief on unlisted shares, provided you meet
the qualifying conditions.
How ever you perform the calculation, keep a record. HMRC have a specialist
team who deal with these cases and it may be you have to defend your position
or negotiate with them to agree the value for inheritance tax purposes.

IHT413 – Business & Partnerships

As with ownership of unlisted shares, ownership of business and partnership
assets will be relatively rare. The definition between what is an ‘unlisted share’
and what is a business or partnership may be a grey area, so seek specialist
advice if necessary.
The purpose of IHT413 is to set a value for the business or partnership asset and
provide an opportunity to apply for the relevant reliefs, all supported with
sufficient evidence to back the claims and assertions being made.
This is one of the more complex areas of inheritance tax, requiring detailed
answers to relatively complex questions, potentially difficult estimations of the
asset value, and involving the potential for tax relief at different tiers in an
environment where the Government may be minded to make changes in the
future. It seems to me that all of this significantly increases the chance of making
a mistake, or that HMRC will raise queries with the IHT413 submission. As such it
could be worth seeking professional specialist tax advice, perhaps also including
tax planning before death.
As a reflection of the complexity of these matters, IHT413 at least offers the
opportunity at Q25 to add additional supporting information, something most of
the other schedules don’t allow. This could be useful in supplying a level of detail
that may satisfy HMRC and prevent them coming back with further questions and
the time delay this will entail. If you have sought specialist professional tax
advice, this section would also allow an opportunity for their professional opinion
to be noted.

IHT414 – Agricultural Relief

Again, this will be a relatively rare schedule that will not be relevant for most
people. IHT414 allows for the deduction of agricultural relief, though as with
business relief, at the time of writing there is speculation in the press that
agricultural relief may be changed by the Government.
Note that each agricultural holding will need its own schedule completed, so
IHT414 is unusual in that it may potentially need to be completed multiple times.
Each holding must be supported by a plan showing the location and extent of the
holding.
Q5 asks for a ‘detailed description’ of the farming activities. Responding with a
non-detailed description such as ‘farming’ or ‘crops’ seems likely to draw further
questions from HMRC, and the time delays this will bring. Providing information
on the type or crops or animals, relevant numbers, and any changing patterns
through the year will decrease the chances of further questions.
Q6 seeks to draw out how involved the deceased was in the farming activity. The
heavier the involvement in the agricultural activity, the more likely the
agricultural relief will be approved. If you can provide evidence to support your
case this will likely be beneficial.
The questions referenced above and others that follow in the remainder of the
form make IHT414 one of the more complex areas of inheritance tax
management, posing a number of potentially complex questions where specialist
tax advice could be useful.
As with IHT413, as a reflection of the complexity of these matters, IHT414 offers
the opportunity to add additional supporting information, something that could
be useful in supplying a level of detail that may satisfy HMRC. If you have sought
specialist professional tax advice, this section would also allow an opportunity for
their professional opinion to be noted.

IHT415 – Interest in Another Estate

IHT415 is another relatively rare schedule that will not be relevant for most
people. The purpose of this schedule is to account for the unusual situation in
which the deceased had the right to an inheritance of someone who died before
them, but they did not receive the inheritance before they died. Potentially
these assets may need to form part of the Estate that you are managing.
This activity may require significant detective work to track down the necessary
documentation and evidence of the assets involved. Note that Q10 allows you
use estimated valuations, but you must note that you are doing so.

IHT416 – Debts Due to the Estate

This schedule is used to record debts owed to the deceased by other parties, as
they potentially form an asset for inheritance tax purposes.
HMRC request that a separate schedule is completed for each debt. Note that
any accrued interest on the debt also needs to be accounted for in this schedule.
Perhaps there could be situations in which it is believed the debt, or part of the
debt, will not be recovered. If so, try to include as much information needed to
make a convincing case, to help defend this position, and reduce the chance of
follow up queries from HMRC. Q9 would seem the best place to make this case.

IHT417 – Foreign Assets

While IHT401 is concerned with a person living abroad, IHT417 is concerned with
assets held abroad by someone who permanently lived in the UK. An example
would be a holiday home in Spain and perhaps a bank account there too. IHT417
also makes provision for the deduction of aligned liabilities, such as mortgages.
If businesses, land or property forms part of the assets, read the guidance note
on page 4 for the level of detail to be provided. If you skimp on the detail
requested, you increase the chance of HMRC coming back to you with follow up
queries that will create delay.
Perhaps there are unusual cases, but foreign assets will normally be quoted in a
foreign currency. Like share prices, the value of these currencies relative to
Sterling can change minute by minute. The exchange rate to use is the prevailing
rate at the date of death. See the note on page 4 for exactly how this should be
determined, and be sure to present the calculation the way HMRC request.
Given the guidance note on page 4 mentions double taxation relief, there could
potentially be cases where specialist tax advice is worthwhile.

IHT418 – Assets Held in Trust

The purpose of this schedule is to capture the value of any rights the deceased
had to benefit from a Trust. If the Trust has already paid out in the past,
presumably the cash value will already have been realised, so IHT418 is focused
on those cases where there is a right to value that has not yet been realised or
converted.
The questions posed in IHT418 may require a significant amount of detective
work to track down the necessary information. The relative complexity of some
of the questions may also make specialist tax advice, or at least a clarifying
question to HMRC, worthwhile.

IHT419 – Debts Owed by the Deceased

While IHT 416 is focused on debts owed to the deceased, IHT 419 is focused on
debts owed by the deceased. Debts owed by the deceased may potentially be a
liability to the Estate. Examples of debts could include loans, overdrafts, and
money spent on behalf the deceased that is to be paid out of the Estate. This
last point is particularly of note because it may be that in your role as Executor
you have incurred expenses on behalf of the Estate that has not yet been repaid,
perhaps paying utility bills. You have the opportunity here to formally account
for them and explain why money from the Estate should be paid to you for these
debts.
The guidance notes at the top of IHT419 are unusually long, noting rules and
exemption on what can and cannot be claimed, so take the time read these
carefully and assess these against your own position. There are some technical
questions to consider here like whether an ‘excluded property’ applies, whether
there are ‘real commercial reasons’, special relief scenarios, and the nature of
gifts. If in doubt about these call HMRC to discuss or seek professional tax advice.
Q6 provides an opportunity to give more detailed explanations in support of the
information provided, and this could be useful in avoiding follow up queries by
HMRC and the time delay this will create.

IHT420 – National Heritage Assets

Certain buildings, land, works of art, and other objects may be given special
status to exempt them from inheritance tax (and possibly also capital gains tax).
This will be a rare exemption and most likely this schedule will not be relevant for
you.
In order to qualify, the asset must be deemed to be of special interest, be kept in
the UK, and the public given access. Qualifying assets are termed ‘Conditionally
Exempt’. The tone of the language in IHT420 suggests that HMRC reserve the
right to change the conditions of the exemption.
Broadly speaking, the test for whether assets meet the necessary standard
includes factors such as whether it is pre-eminent on the grounds of national
scientific, historic, or artistic (or scenic in the case of land) interests.
While the broad remit of this schedule is not hard to understand, the devil is in
the detail. The finer details of what qualifies may be open to interpretation, or
require some negotiation with HMRC. Having agreed to the terms of the scheme,
it may be difficult to implement in practice, given the need to allow sufficient
public access to the asset. Given that the value of the asset in question is
probably very large, mistakes with this schedule, or failure to include all the
necessary information could be costly. This is one of those areas where
professional tax advice is probably worth the investment.

IHT421 – Probate Summary

From 17th January 2024 IHT421 no longer needs to be completed. This schedule
has been superseded because HMRC have made a process change. When HMRC
respond with confirmation of your inheritance tax calculations, the letter includes
a unique code and Estate values. When you later make the Probate application to
HMCTS, this is in the information you will use, rather than using IHT421.
Part of the reason for this change is to stop early, and potentially incorrect
Probate applications that contain the wrong Estate values for inheritance tax.
The new system means you can apply for Probate knowing that HMRC have
agreed your initial calculations (noting that if you have used estimated figures
you may need to go back to HMRC and amend the values, especially if these
change your inheritance tax calculation).
I find the instructions and information around Northern Ireland and Scotland
conflicting and confusing. Given this is a new process and the status of IHT421
may be in a state of flux if you live in these nations, it is worth obtaining a copy
of IHT421 online and reading the latest guidance notes.

IHT430 – Reduced Rate of Inheritance Tax

If the deceased left at least 10% of their net (i.e assets less liabilities) estate to a
qualifying charity, it may be possible make a claim to pay inheritance tax at the
reduced rate of 36%. That may not sound like a large difference from the
standard inheritance tax rate of 40%, but it could amount to a substantial sum
on a large estate. If, in your position as Executor, you believe you are managing
an Estate that qualifies, IHT430 is the form you will use to make the claim for the
reduced rate.
The text at the top of the form notes a few other scenarios in which you may
wish to complete IHT430, and includes a link to an online calculator that will help
determine if the Estate qualifies. The online page of the calculator details the
information that is needed to complete the process. These questions potentially
require an advanced level of detail about the Estate, and so this may be best left
until relatively late in the process so that you have time to accumulate the
necessary information. That said, please note that IHT430 must be submitted
within 2 years of death, so be careful not to delay too long.
The accompanying notes for IHT430 are unusually long and complex because
they touch on the concept of ‘components’, which are split into 3 different
categories, each potentially treated differently. There is also an option later in the
form to merge these components. Although an example of how to perform that
calculation is provided, you may wish to obtain specialist tax advice if called
upon to perform this calculation, or at least phone HMRC to discuss your
calculation and confirm you have performed it correctly.
Note that all the appropriate persons must sign the declaration at the end.

IHT435 – Residents Nil Rate Band

Only complete this form if you meet the qualifying criteria set out earlier. So long
as you do meet the criteria, this is a powerful schedule that can potentially
eliminate your inheritance tax bill, so take the time to complete it properly. Read
the instructions in each box and perform the calculations requested carefully.
Double check your work. Even better ask someone else to check it too.
The form includes its own set of guidance notes on pages 5-7 and these are
useful in defining some of the more unusual terms such as ‘grossing up value’.
Note that if the qualifying criteria apply, it may also be possible to transfer
unused residents nil-rate band and thus potentially even double the standard
rate. A separate form, IHT436 (discussed below), must be completed to claim
this transfer.
Q25 refers to the ‘residents nil rate band calculator’. This is a useful online tool,
the web address for which is given on the form. You are prompted to answer a
series of questions, after which you are provided with the value to use in IHT435.

IHT436 – Claim Transferable Residents Nil Rate Band

This schedule fulfils a similar purpose to IHT402, involving the transfer of unused
allowance from a spouse or partner who died before the person who’s Estate you
are managing.
While IHT402 facilitates the transfer of unused Nil Rate Band, schedule IHT436
facilitates the transfer of unused Residents Nil Rate Band, i.e. the tax relief
associated with a property and family relationship that meets all the necessary
criteria. The similarity of the terms probably increases the chances of muddling
the two by mistake if you are not used to using them, so take the time to be sure
you are using the correct information.
Since this is, in effect, a request to enhance the existing Residents Nil Rate Band,
IHT436 should only be used if IHT435 is also being submitted.
There is a deadline for submitting IHT436, with HMRC allowing 2 years from the
date of death of the Estate that you are managing (not 2 years from the death of
the spouse or partner who died earlier).
The maximum amount of Residents Nil Rate Band that can be transferred
depends on the relevant tax year. Note 2 includes a summary by year. The
maximum at present is £175,000, assuming the person who died first did not use
any of this allowance.
Notes 4 and 5 advise that Taper Relief may apply on larger Estates, so you may
not be able to claim the full amount. It may be worth phoning HMRC or seeking
professional tax advice if you are managing a larger Estate that falls in this
category and the required calculations are unclear.

IHT C1 – Confirmation Inventory

This schedule only needs to be completed to apply for confirmation if the
deceased lived in Scotland. It applies from 1st January 2022.

Schedules & IHT400

The schedules noted above are all those listed on the checklist for consideration
on page 13 of IHT400. Tick those that you deem relevant to the Estate and that
you have fully completed.
Many of the schedules will require you to return to IHT400 and enter a figure
generated in the schedule. Perhaps in the future the system will be moved online
and then the various schedules can be made to automatically transfer the
correct fields back to IHT400. For now, you must do this yourself. If you make a
mistakes, even a simple one like transposing numbers, perhaps writing
£100,890 when you should have written £100,980, you risk creating delay and
queries from HMRC. Take the time to read IHT400 carefully and extract the right
number from the right box in the right schedule. Triple check your own work,
and if possible, have someone else check it for you, if only to confirm you
correctly transferred the numbers into IHT400 from your schedules.

Inheritance Tax Calculation

By the time you reach page 12, the time has come to calculate the inheritance
tax payable, or else to note that no such tax is due. If you don’t want to calculate
the inheritance tax yourself, HMRC offer to do it for you, with no charge. Tick the
box at the top of page 12 if you wish to use this service.
Alternatively, page 12 allows you to perform your own calculation of inheritance
tax, using boxes 111 – 119. If you have Residents Nil Rate Band (Q111) or Nil
Rate Band (Q115) available, the calculation on this page provides the
opportunity to make the necessary deduction. For many people these deductions
will be sufficient to reduce the Value Chargeable to Tax (Q118) to zero, or a
negative number, in which case you may leave Q118 blank. Since inheritance tax
is chargeable at 40% on the amount given in Q118, if the Chargeable Value is
zero, there is no inheritance tax to pay, and the box at Q119 can also be left
blank.
If your calculation leaves you with a Chargeable Value at Q118, you will pay
inheritance tax at a rate of 40% on this amount. Multiply your figure at Q118 by
0.4 to find the value to be entered at Q119. Note that there is no low value cut
off for this calculation. Even if you have a Chargeable Value of £100, creating
inheritance tax of £40, you may think this is too small an amount to bother with,
but HRMC make no such provision. Note that Q119 makes provision for an
amount in pounds and pence, which is to say that HMRC expect you to make the
tax payable calculation accurate to the penny. You may think this is pedantic
and a waste of time, but if you enter the wrong amount, you risk HMRC rejecting
your work, or coming back to you with queries. HMRC set the rules for the
process and you will need to follow them if you want them to agree your work.
For cashflow purposes, it is useful to note that it may be possible to have
inheritance tax paid directly for the deceased’s existing savings. This could be
very useful if you have not been able to take control of these accounts yet,
perhaps awaiting the grant of Probate to do so. If you wish to take up this option
use Q120 and complete the schedule directed, depending upon where you live.

Type of Grant Required

Q121 is important for directing HMRC on the type of grant application you are
making. For most people this will likely be ‘Probate’. If the Will is missing or
other problems with this document have emerged, you will likely be applying for
‘Letters of Administration’. There is also an option for ‘Confirmation’.
Page 13 offers a self-reminder as well as a guide to HMRC on which schedules will
be included in your application. Take the time to get this right because if you tick
the wrong box by mistake, HMRC may come back to you with further queries,
perhaps seeking to understand if something important is missing. This additional
correspondence will add much time to the application process.

Noting Provisional Values

Page 13 also offers the opportunity to note any ‘provisional values’, which is to
say figures you have used in IHT400 that may be subject to change, probably
because you or someone else has estimated them. Examples might include a
house that has been valued by an estate agent but has yet to be sold, and you
won’t know the value until the sale is complete. If you are going to enter items
here, why not boost your credibility with the person at HMRC assessing your work
by also noting where in the form your estimated value applies? In the example
provided, the provisional value of a house, you could write ’51 – house value’, 51
being the box in IHT400 where the house value is recorded. If these provisional
values change materially, which is to say they change the value of the
inheritance tax payable, you will need to contact HMRC again to agree the
necessary changes.

Signing IHT400
Page 14 is where all the appropriate people need to sign, for example if there are
two Executors of the Will, both must sign to agree the contents of IHT400. Since
you also need to send a copy of the Will (provided you have one) to HMRC, they
will be able to check if any Executor has not signed, and if they have not it is
unlikely your application will proceed until this has been remedied.

IHT400 Checklists and Additional Information

Page 15 provides a further checklist and reminder of supporting information. As
with the checklist on page 13, take the time to complete this accurately to avoid
follow up questions from HMRC and the delays this will incur.
Page 16 offers a final opportunity to note ‘additional information.’ While there
may be a temptation to wax lyrical here, and note down general worries,
concerns, and frustrations, it may be as well to read the sort of information that
HMRC are asking for, and perhaps avoid the temptation to write anything unless
you feel you really need to, especially if it does not correspond to the information
that HMRC are asking for. Writing information here that is not required may
potentially generate queries from HMRC that could have been avoided.

Submitting IHT 400

Even if you have calculated there is no inheritance tax to pay using IHT400,
there are still good reasons to submit the form. The most pressing of these
reasons for most people is probably the Probate application, which may not
proceed until HMRC have confirmed there is no inheritance tax to pay. If the net
value of the Estate is worth over £325,000 and you attempt to proceed with
Probate without HMRC confirmation, it is likely your application will be delayed.
A second reason for submitting IHT400 with no inheritance tax to pay is that it
gives peace of mind, because you will have confirmation from HMRC that they
agree your calculations.
Although IHT400 can be completed in pen (blue or black according to the form
instructions), if you have access to a computer and printer, it is probably better
to fill in the fields on a PDF. Not only will this make correcting errors much easier,
it will probably also mean you produce a neater document, provided the printer
is of reasonably good quality.
In addition to a paper copy of IHT400, signed by all the relevant parties, you will
also need to include:
  All the schedules you need to support the application. These should all
have been noted in the tick boxes of page 13 of IHT 400. Take your time
and double check you included all the schedules you need to and that
these correspond with what you have ticked on page 13. If a schedule is
missing or you have ticked the wrong boxes, it is likely HMRC will come
back to you with queries and this will consume much time.
 A copy of the Will and any codicils. Note that unlike the Probate
application that will follow, the inheritance tax work does not require that
the original Will and codicils be sent. If you send the originals and they
are the only versions you may incur a significant delay in getting these
documents back from HMRC, plus you increase the chance of the
documents being lost. It will be much more difficult to obtain Probate if
you have lost the original Will or it’s codicils, so take the opportunity to
make copies, keep the originals safe, and send the copies to HMRC.
 An original Death Certificate – in this case a copy will not usually be
sufficient, you must include one original certificate.
 Any supporting information, such as professional valuations. The
instructions at the head of IHT400 advise that you do not have to send the
originals, a copy will do.
 Though a covering note or letter is not a formal requirement, I recommend
including one because it helps add to the impression that you are a
professional and organised person who has done a thorough job. There is
no need to write chapter and verse, a single page of A4 should be
sufficient. Include your name and contact details, state why you are
applying, what information you have included. If you have included
supporting information, such as valuations, clearly state what part of the
IHT400 or supporting schedule these are addressing. If you have
calculated there is no inheritance tax to pay, it is worth stating this up
front so the assessor knows what to expect from the rest of the
information.
When you have you pack assembled, put it together in a neat and logical order,
because you are looking to give the impression you are a neat and logical
person, the sort of person who will enter logical and correct information in a
form, and therefore can hopefully be quickly approved by the assessor at HMRC.
If you present the information in a haphazard way, it is potentially a red flag that
you are disorganised person who will make mistakes, and therefore that your
work should be checked very thoroughly, with the initial suspicion that you have
likely done something wrong. A logical order would be something like – covering
note – IHT 400 – supporting schedules arranged in numerical order – other
supporting information – copy of the Will – Death Certificate.
Place your information in a sturdy A4 envelope. You may also wish to brace the
top and sides with tape, because if anything falls out it will likely undermine your
whole application.
The submission address at HMRC is given on the IHT400 form. I won’t quote it
here in case HMRC change it. Note though that the postcode, at least at the time
of writing, does not correspond to city, as most postcodes usually do. The IHT400
postcode is a special creation for HMRC, allowing them to move the work around
the country.
There is no requirement to avoid the cheapest postal option, second class, non-
recorded delivery. However, given this is time sensitive information that may
delay you starting other work, such as Probate, you may decide to pay the extra
for first class. Perhaps more importantly though, if you can afford it, I would
recommend paying the extra for at least record delivery. This will mean that you
know, and have proof in any future dealings with HMRC, that your submission
was received. Again, it adds to the impression that you are someone who is
organised and has taken this work seriously. If you do use the recorded delivery
option, be sure to keep a copy of the proof.
Once the letter has gone in the post, it is over to HMRC to do their work. You
could perhaps make a start on the Probate form, but there is little you can
formally progress until HMRC respond.

The HMRC Confirmation Response

Though HMRC have an aspirational target of a response within 10 working days
of receipt, when I telephoned them in 2024 the recorded response requested that
people did not chase their applications until 20 working days from the date of
receipt. If you have used the postal recorded delivery service, you will know the
date of receipt, and can then calculate the 20 working days on top of that.
Essentially then, you might expect a response in about a month. If you have not
had a response within the time period, call HMRC to confirm the position with
your submission. If you have used the recorded delivery option as recommended
above, you will have the advantage of being able to confidently state the date
that HMRC received your work.
If there is missing information, or HMRC have follow up queries, the HMRC
response letter should state what you need to do next. Since this will be on a
case-by-case basis, there is not much a guide can add in these circumstances,
other than to follow the instructions given and seek professional advice if
necessary.
Otherwise, the letter should hopefully offer confirmation in keeping with the
purpose you stated in IHT400, e.g. request for Grant of Probate or one of the
other options. Given the time and effort you’ve put into this work you might
reasonably expect a trophy, a gold medal, of at least a beautiful and ornate
certificate, but when the HMRC response comes through the letter box it is only a
single sheet of A4 paper. It may not look like much, but that piece of paper is
potentially the gateway to proceeding with the Probate application, so if you feel
a sense of relief at having the confirmation of your work, you are probably not
alone.
If you applied for Probate the letter will confirm that you may now proceed with
the application and crucially provide you with a ‘Unique Code for Probate
Application’, not to be confused with the IHT Refence Number. For the avoidance
of doubt, the Unique Code is the one you will use in your Probate application.
The letter will also provide the gross value and net value of the Estate. You will
also need these figures for the Probate application itself.
If there is no inheritance tax to pay, surprisingly the HMRC letter does not make
this as an absolute statement. If your IHT400 submission indicated there was no
tax to pay and HMRC have not asked for more information, it is reasonably safe
to assume that HMRC agree there is no tax to pay, even if they don’t openly say
so. As a further test, I have heard that if the IHT Reference near the top of the
letter starts with an ‘A’, it indicates there is no tax to pay. The examples I have
seen confirm this to be true.
If you lose this form it should be possible to obtain a replacement from HMRC,
but at the cost of significant time delay, so by whatever means you deem best,
be that taking a picture on your phone, locking the document in a safe, make
sure you keep the letter safe so that you have the information needed for the
Probate application to hand.
HMRC give themselves some wriggle room to come back to you with further
questions, specifying a future date after which you may assume there are no
further queries. Mark the date in a calendar so you know when this has passed,
and that you have a greater sense of security in your application.
HMRC may dispute your calculations and potentially propose a different amount
of inheritance tax, no doubt higher, than any you have calculated. There is still
room for discussion and negotiation over this figure, especially if you have
supporting evidence for your position. Professional tax advice could also be
useful in these negotiations.
Even so, HMRC include a further caveat, which is that you must advise them of
any changes that result in a change to the tax due. If there are changes,
such as the value realised on a property being higher than the value you
estimated in IHT 400, but these changes still mean there is no tax to pay,
perhaps because the Nil Rate Band and Residents Nil Rate Band can soak this up,
HMRC advise that you do not need to contact them.
Now that you have the HMRC confirmation, there should not be any barriers to
starting the Probate application.
Probate Application

The purpose of Probate is to assume the legal powers to take control of the
assets and liabilities in the Estate, and distribute those assets in accordance with
the Will and the prevailing laws and taxes of the time. These assets might
typically be money in bank accounts, a property, shares, and premium bonds,
but could include more exotic assets such as farms and business investments.
In order to assume these legal powers you will need a Grant of Probate
(Executors) or Letters of Administration (for Administrators) from the
Government (see the earlier section of ‘Who This Guide is For’ for the distinction
between these two. The process for obtaining either is essentially the same.
Because the Grant of Probate is very powerful, potentially open to abuse, the
Government control apply a rigorous application process.
While inheritance tax is administered by HMRC, the Grant of Probate is
administered by His Majesties Courts and Tribunals Service, abbreviates to
HMCTS, or sometimes just CTS. This means that you are dealing with a different
Government department than when you were working on the inheritance tax,
and that you will have to submit a whole new set of information, including a
different application form. However, if you have the Unique Code for Probate
Application from HMRC, this will give you a big head start with the Probate
application.
If you read older Probate instructions they will probably direct you to find and
contact your nearest Probate Registry. If you have attempted to do this you will
likely have become confused as to why none can be found. This is because the
process has recently been centralised by HMCTS.
As noted earlier, while the broad process is similar, Scotland will occasionally use
different rules and terminology. In Scotland the process is not called Probate but
Confirmation. The Executor is termed Executor-Nominate. The Administrator is
called Executor-Dative and the Letters of Administration themselves are issued
by the Sheriff’s Court.

Why Probate May not be Needed

Even if you have assets to take control of in the Estate, it may be you can do this
without needing to apply for Probate if there the Estate consists of smaller cash
accounts, and any the property is held on a beneficial joint tenancy basis (such
property should automatically transfer to the survivor without the need for
Probate).
Financial companies will often allow an Executor to take control of an account
without Probate provided that certain conditions are met. Each organisation has
its own maximum threshold and rules for access without probate, and since
these could be changed at short notice, it is probably not helpful to provide a list.
However, it is possible to provide some rough guidelines.
In order to take control of an account without Probate you will likely need at
least:
  an original Death Certificate
 an original Will in which you are the named Executor
Beyond this each organisation may have their own evidence or document
requirements that can only be found by contacting them. In additional to these
document requirements, each organisation will also have its own financial
threshold for allowing control. If the cash in the account is under the threshold
you may be given control, while above the threshold you will be asked to provide
a Grant of Probate.
There is no obvious consistency or logic across the industry on where the
threshold is set. Some companies may state a threshold below £50,000, others
below £5,000. The figures you see one day could be changed the next. It is
purely a matter of company policy in which the Government does not seem to
interfere. This being the case, your best bet is to contact the company directly
to determine their policy.
Most of the larger financial organisations have a dedicated bereavement
services. The contact details for these can usually be found by simply Googling
‘[name of company] bereavement service’. If the company has a high street
presence it is usually possible to initiate the process in the branch, though you
will probably be referred to a specialist bereavement service to complete the
process and potentially go through additional security checks.
The larger companies with specialist bereavement services will likely have had
specialist training, so you may hopefully expect a degree of sympathy for your
loss, even if this is only standard patter that people have been told they must
say. If you are dealing with a smaller company it becomes more likely they will
have no specialist bereavement service, and consequently the experience of
dealing with them may be less efficient and perhaps less sympathetic to your
loss.
If you are able to take control of these accounts, you will usually have the ability
to close them completely, either by transfer or cheque. This raises the question
of how to treat the money, and this becomes more complex if you are managing
money on behalf of other beneficiaries.
It is possible to establish a dedicated Executor account, including a joint account
of there are multiple Executors, but not all banks offer them, and, anecdotally, I
have heard that, because it is a relatively unusual request, the bank staff are not
always confident of how to complete the process. There may also be additional
security requirements that make the process onerous. All that said, creating an
Executor account is arguably the gold standard of Executor behaviour, especially
if you are not a beneficiary yourself.
While it may be the gold standard, there is no legal requirement to create an
Executor account and it should usually be possible to complete the whole
Probate process without one, though perhaps there are some unusual cases
where an Executor account becomes essential. What I would certainly
recommend is to avoid mixing funds, adding money obtained through Probate to
your own account, because if you are called upon to provide evidence of how the
money has been transferred and used, it may become much harder to give a
transparent account. A sensible middle ground is arguably to create a new,
separate ‘standard’ account with your existing provider that is used purely to
handle Estate finances. If you need to provide evidence of how Estate money
has been used, all the money going in and out should then be recorded in one
place.
Even if you decide the Probate is not required, it is a good idea to keep a copy of
the Estate accounts (it’s assets and liabilities), plus a copy of the Will, in case
there is a later challenge.

The Probate Application

Unlike the inheritance tax submission, which for the time being at least is purely
postal, HMCTS offer a partial online application, though you will still need to send
supporting information in the post. The first decision you have with the Probate
application is whether to make a postal application or an online application.
While this must come down to personal choice, the online route offers the
potential for significant time saving, perhaps saving months over the postal
application route.
I am not sure why the time saving is so significant, but presumably HMCTS find
the online applications easier to process, possibly building in a degree of
automation in the checking of the form that allows them to make a swifter
decision.
This swifter processing of the online application will only hold true if there are no
mistakes in the application itself. If incorrect information is entered or required
information omitted, your work will go down a separate route for more rigorous
examinations and potentially the posing of further questions from HMCTS. As
with inheritance tax submission, your goal is to create a complete, accurate, and
professional looking submission that gives the person assessing the work the
impression you are a competent and honest person who’s work should be quickly
approved so that they can move on to the next submission.

PA1P / Online – Probate Application Form

The Probate application is made on form PA1P. If you use the online application
process the form is essentially the same but because it has a degree of
automation built in, you will only be asked the relevant questions. This makes
the online application slightly shorter and therefore quicker to complete.
The complexity of PA1P relative to the inheritance work of IHT400 is greatly
reduced. If you have completed IHT400, you should find PA1P much more
simple. Even so, take the time to enter accurate information.
If you are reading slightly older guidance online or in print, you might see
confusing references to IHT205 being required for Probate. The process was
update in 2023 and IHT205 is no longer needed for deaths that occurred from
2023 onwards.
In addition to information about the person who has died, and the person(s)
making the application, PA1P has two main areas of focus:
  to confirm the status of the Will and any codicils
 to confirm the assets of the Estate
This is very much a legal process you are engaging in. The Will and supporting
codicils are important legal documents, and Probate will grant you extensive
legal powers over the finances of the Estate. HMCTS are therefore rightly
seeking to make sure applications are legitimate. This is why they ask for the
originals, rather than copies, that are much easier to fake. If there are any signs
the documents have been altered from their original state, HMCTS will likely raise
queries.
If you have completed the inheritance work with HMRC, using form IHT400 and
supporting schedules, and received the HMRC confirmation, the Estate valuation
should be straightforward forward because the Unique Code and gross / net
asset values have already been neatly summarised on one page, and you simply
need to type them in accurately.
If you have not obtained this information it is unlikely you will be able to proceed
with the Probate application, unless you meet the necessary criteria, such as
being a fully qualified Exempted Estate (i.e. under £325,000, plus all the other
conditions). In order to help determine if you do meet the qualifying criteria, and
what the net and gross assets figure are, the form provides a link to an
‘inheritance tax checker’ that in turn includes an ‘inheritance tax calculator’. If
you have not generated the necessary information already in IHT400, these
checkers and calculators will advise on your Probate eligibility status, and guide
you through the steps to determine the net and gross figures needed for the
Probate application.
All the named Executors will need to sign the application, or else the reason
must be provided. A further advantage of the online application process is that
those Executors not making the application can sign remotely. Provided the
email address of the other Executors is correctly entered through the online
process, they will be automatically contacted and provided with the means to
sign electronically. If you have multiple Executors living far apart, this can create
a significant saving in time, logistics, and postal costs.
Whether you are applying by post or online, you will need to provide supporting
information to HMCTS by post. Helpfully, if you use the online process, HMCTS
generate a list of the documents you need to provide.
If you read older Probate guidance you may see it refer to the need to find your
appropriate Probate office and arrange to attend an interview and swear the
Executor’s oath. This process has now been stopped and moved to online /
postal application.

Applying for Confirmation in Scotland

The Probate process in Scotland is called ‘Confirmation’ and is dealt with by the
Scottish Courts and Tribunals Service. The process in Scotland differs with the
size of the Estate. If the Estate is valued at £36,000 or less it is termed a ‘small
estate’, while if the value is higher it is a ‘larger estate’. The process to be
followed differs with the size of the Estate being managed. See the Scottish
Courts and Tribunals Service website, the most appropriate page of which is
probably www.scotcourts.gov.uk/taking-action/dealing-with-a-deceaseds-estate-
in-scotland.

Probate Fees
Whether the application is by post or online, there is an application fee to pay. At
the time of writing the fee is the same for both options, £300, but of course this
is subject to change by the Government, so be sure to check the latest figure
with HMCTS, though if you are applying online the fee will be automatically
calculated. At present there is no fee if the Estate is very small, currently
regarded as under £5,000, though with an Estate of this size, it may be you can
access the assets without Probate anyway.
Unless you specify otherwise, HMCTS, provided all goes well, will provide you
with a single Grant of Probate. Depending on your point of view and personal
requirements this could be problematic for several reasons.
 Firstly, if you lose the document you have effectively lost the power to
exercise Probate until you can obtain a replacement from HMCTS.
 Secondly, if there are multiple Executors, each person might reasonably
expect at least one original Grant for themselves.
 Thirdly, even if there is only one Executor, that person may be called upon
to deal with multiple organisations who all require a Grant of Probate to
proceed with their work.
The good news is that it is possible to obtain additional original copies for a very
small amount of money relative to the time and hassle it will take to obtain
further copies from HMCTS at a later date.
The question of ‘how many Grants is enough’ must be a personal decision, and
should be guided by the complexity of the Estate, the number of Executors, and
the number of organisations that must be dealt with. However, given the small
upfront cost, I think there is a good case for ordering slightly more than you think
you will need.

HMCTS Response
Provided all has gone well, the HMCTS response will be the Grant of Probate
itself, with no covering letter or any other documentation.
As with the HMRC response to your inheritance tax work, you might feel your
efforts deserve a very fine certificate, but the Grant of Probate is quite
understated when it arrives. A single sided piece of A4 paper, it at least looks
somewhat more official than the HMRC response, bearing a stamp from the High
Court of Justice, and a small silver security sticker.
The Grant of Probate should name the person who has died, and confirm that
HMCTS have registered the Will. The document will confirm the right to
administer the Estate has been granted to specific named individual(s).
Using the Grant of Probate
The Grant of Probate is a very important legal document, granting extensive
powers over the Estate finances, so keep it safe and secure. It is not a document
you want to fall into the wrong hands.
When accessing funds from the Estate held by financial organisations, such as
banks, you will usually need to present an original version of the Grant of
Probate. If the organisation has a high street presence it may be possible to take
the document in person and avoid the hazards of a two-way trip through the
postal service. If you must send material by post, include a covering letter that
includes not only your details, but those of the deceased, including any relevant
account numbers. I suggest using at least the recorded delivery service, but
given the importance of the documents you are sending, you may prefer to
upgrade to the full tracking service. The goal is to gather everything together in
your Executor account, or similar, such that it can be distributed to the
beneficiaries, provided HMRC and the people owed money have been paid first.
You will almost certainly need the Grant of Probate if there is any property,
business interests, or similar transactions in which lawyers or legal professionals
become involved to arrange the transfer of assets from one person to another.
Many Executors will have a property to sell. The Grant of Probate does not
automatically transfer the property to you, but it does give you the legal right to
arrange the transfer of the property to yourself or someone else. If you are
transferring the property ownership, perhaps with a view to keeping the
property, this is done through the Land Registry. See
www.gov.uk/government/organisations/land-registry for the latest guidance. Be
aware the system in Scotland, while having the same broad intent, may have
process variations
If you are seeking to sell a property on the open market, there is no need to have
it transferred to your ownership first. A Probate sale should be familiar work for
estate agents and the aligned legal professionals, though you may wish to advise
the buyers the transaction is a Probate sale, and thus cannot be completed until
Probate has been granted.
Engage the services of a suitably qualified solicitor or conveyancer for such
property work. Check to make sure they are registered and regulated with a
professional body. As a personal preference, given they will potentially be
holding a large amount of my money, I prefer to deal with an organisation that
has a physical presence I can visit and gain some assurance it is well established
and not liable to disappear overnight. It seems to me that this risk of sudden
disappearance is heightened with online only organisations.
Your legal representative will need to see an original Grant of Probate, and
perhaps make a copy for their own records, but they should not seek to keep the
original. Note that if the Grant records multiple Executors, the legal
representative will want to confirm that all are agreed on the instruction to sell
the property.
The fact you are managing a Probate property sale may mean you are dealing
with a property that you may never have lived at, and thus lack a full picture of
the property’s history and documentation. It seems to me that honesty is the
best policy in these circumstances. The legal transaction will likely require you
to answer questions about the property and if you provide false information to
the buyer it may be detrimental to you in the future. If you don’t know the
answer to a question or lack a document requested, discuss with your legal
representative, but it may be best to simply respond that you are not in a
position to answer due to the Probate nature of the sale.
It may be possible to build in a degree of legal protection by selling the property
with ‘limited title guarantee’ rather than the more usual ‘full title.’ Such an
action is not unusual in a Probate sale, especially if the Executor selling the
property is particularly removed from the property, for example a lawyer acting
in the role who is not related to the family and knows little if anything about the
property or the person who lived there. The protections provided by limited title
are somewhat limited and, as the name suggests, mainly focused on the legal
title to the property. Moreover, a sale with limited title can be off putting for
buyers and raise suspicions about the property transactions, so it should be used
with care and discussed with your legal representative.
Distributing the Estate

For most Executors, the completion of a property sale will probably mark the end
of the process of monetising the Estate and drawing the cash realised together in
one place. At this point, all the assets of the Estate have been liquidated (turned
into cash), though perhaps there are also heirlooms like jewellery and paintings
that need to be shared out, and of course this a point at which conflict may arise
between the beneficiaries.
Assuming an inheritance tax has been dealt with by this point, any legitimate
debts must be paid off before the beneficiaries. Personal loans and mortgages
will probably be the most common debts encountered, and of these the
mortgage is likely to be the most pressing and problematic because it is secured
on the property in question, which means the lender can repossess the property
if their lending conditions are not met. Calling the mortgage lender to discuss
the available options should therefore be a priority.
Once the Estate debts are paid, the remainder will go to the beneficiaries. If
there is a Will, it has hopefully been written in such a way that clear and precise
instructions have been given on how the Estate should be distributed. This may
be done on a percentage basis, for example a 50% split between two
beneficiaries, or a statement that specific amounts and items are to be given to
named individuals. The latter is fine so long as their money in the Estate to pay
them. There is no requirement for the Executor to personally guarantee these
amounts, beyond what the Estate can actually pay.
If the Will has not been well written, there may be confusion over who gets what,
and this may even descend into legal action as beneficiaries argue over how
much they should get. It may be possible for you to resolve such disagreements
yourself, provided everyone agrees, and in this case the agreements should be
formally signed. You may wish to seek specialist legal advice if you feel matters
are moving beyond your ability to control.
A further challenge that may be faced is locating the beneficiaries in order to pay
them. Families can drift apart over time, perhaps moving abroad. Your own
network of contacts may be able to help but other options include a Google
search on the name, checking social media accounts like Facebook, Twitter,
Instagram and Linked In, and adverts in the local paper. If a lot of money is
involved, you may wish to consider a private detective.
If you cannot find a beneficiary you should tread carefully because you may be
personally liable. In order to give yourself some protection, you could consider
setting their portion aside and paying out the other beneficiaries. At present, as
best I can discover, you must hold the money for 12 years in such a way that it
can be paid out promptly if the beneficiary turns up, but this rule could in any
case change with time. An alternative is to divide the share of the missing
beneficiary between the others beneficiaries, but with a signed indemnity
agreement that all equally liable to pay up if the missing beneficiary later asks
for the money. This is fine in theory, but in practice could become messy if the
signing parties refuse to pay, or are unable to pay, in which case the Executor
may find themselves liable. It may also be possible to buy an insurance product,
paid for by the Estate, to cover the financial possibilities and impacts. The
picture is hopefully emerging that missing beneficiaries present a significant risk
to the Executor, and one that increases with the financial size of the Estate. It
could be wise to take specialist legal advice if you find yourself in such
circumstances.
If you have taken my earlier advice and arranged a single account for the Estate
finances so as to avoid muddling with any other money, it should be relatively
straightforward to make the necessary calculations and make the payments to
the named beneficiaries. Given you may be dealing with very large amounts of
money, a means of payment that tracks and confirms the payment has been
made (e.g. cheque or bank transfer) is preferable over a sack of cash for which
no receipt is given. If making a bank transfer it may be advisable to first transfer
a token amount, such as £1, to confirm the bank details are correct and will
reach the intended recipient, especially if you have never transferred money to
them before.

Personal Items
If personal items are being distributed, while these can be handed over directly,
it is worth creating a written receipt that itemises what has been given, the value
used for inheritance tax or Estate valuation, and a signature confirming the
change of ownership. Keep one copy yourself and give one to the beneficiary.
There should be enough detail in this receipt to avoid ambiguity, especially if
similar items are going to different people. You may want to supplement this
with a photograph if the item is especially valuable. Even if family relationships
are cordial now, such that you think no written agreement is needed, they might
sour in the future in such a way that you are glad to have the protection of a
signed written record.

Shares
If you have not liquidated the shares and turned them to cash, but are rather
transferring the ownership of the shares beneficiaries, you will need a stock
transfer form from the company registrar, or multiple forms if the shares are split
multiple ways.
These days it is rarer for people to hold shares directly and they are more likely
held in ‘nominee accounts’ in which the shares are directly held by the broker,
often an online only operation, but in which you hold the right to the dividends
and any sale proceeds. In this case, provided you have the Grant of Probate, the
broker should be able to arrange the transfer of ownership for you, though you
may have to set up an account with them. Once the transfer is complete you
can keep or sell them as you wish, though be advised that share ownership can
bring income tax implications on dividends, and capital gains tax implications on
sale profits, unless they are held in an ISA account.

Distributions to Children
Any beneficiaries under the age of 18 cannot directly inherit until they reach this
age, and this means you may need to set the money aside on their behalf for a
period of time.
Financial investment advice is beyond the scope of this guide and you should
seek professional advice, especially if large sums are involved, however some
broad points can be made.
On the face of it the lowest risk is to invest the money in a deposit account or a
savings bond. Depending on their financial circumstances, it may also be
possible to arrange with the organisation that no tax should be paid on the
interest. Children are not exempt from income tax, but their income is usually so
low that they fall within the tax-free threshold. Discuss the circumstances with
the bank or building society. However, though capital is not usually directly at
risk, there could be a risk of capital being eroded by inflation, especially if there
are many years until the inheritance is due. Also banks and building societies
may only guarantee deposits up to a certain amount, and so there is a risk of
some loss if the institution itself goes bust.
Stock market investments offer the potential for greater return, including
potentially some protection against inflation, but at the risk of direct loss of
capital, and if capital is lost you potentially open yourself to legal action from the
beneficiary. There are financial products such trackers that link the investment
to a broad market such as the FTSE100 in the UK, or the S&P500 in America, and
so avoid the higher risk that comes with single company investments, but even
these do not guarantee capital will not be lost.
While these pointers are hopefully useful in guiding your thinking, they should
not be taken as a substitute for professional financial advice.

No Named Beneficiaries / Intestacy

If there is no Will then there are no named beneficiaries. This means that the law
of intestacy applies, and you have legal responsibility to follow these rules.
The law of intestacy sets out a prioritisation as follows: spouse, children, parents,
siblings, half-siblings, grandparents, uncles and aunts, the Government.
However, matters are complicated by the fact caveats and formula applies as to
who get how much in certain circumstances, moreover these rules are subject to
change at short notice by the Government, such that it is probably not helpful to
set them out in detail here. It will be more helpful to consult the relevant site
online at www.gov.uk/inherits-someone-dies-without-will, where you are guided
through the outcomes based on your own scenario and the prevailing rules.

Residuary Estate
Often the terms of the Will be written such that everything is clearly left to
beneficiaries, but there may be times where the terms of the Will have been
followed, beneficiaries have been paid accordingly, inheritance tax and
legitimate debts have been paid, but there is still money or assets left over. This
remainder is known as a residuary estate.
The Will may specify what should happen to any residual estate, but if not you
enter a scenario in which the person has in effect died partly intestate, and the
laws of intestacy apply (see above), but only for the purposes of dealing with the
residual estate.
There is also a lesson here in the writing of a Will, because it is better to either
write the Will such that there will be no residual estate, or else to clearly specify
how it should be distributed.

Records and Accounts

The position of Executor is a highly responsible one, with the potential to obtain
considerable legal powers that grant control over large amounts of money,
however this responsibility also means that other parties, such as beneficiaries,
and HMRC, may hold the Executor financially liable for mistakes or bad practice.
In addition to honest and meticulous management of the inheritance tax and
Probate work, a further defence is to keep detailed records of what you have
done, and the paperwork that other parties send you, such as Estate agents
valuations. The rules on how long records must be kept is always subject to
change by the Government, but the present guidance seems to be that records
should be kept for 20 years. On these sort of timelines, you may be as well to be
prepared to keep the records for as long as you live yourself.
Draw up a set of accounts. The bulk of this work should already have been done
for the Estate valuation for inheritance tax. The additional step on top of that is
to show where the money has gone, be that inheritance tax paid, debts paid,
beneficiary payments, and legitimate Executor expenses. Send a copy to each
beneficiary and have them provide written agreement that agree the accounts,
or else state their objections. When drawing up these accounts keep in mind
that HMRC could request to see them, so make a professional job of it, with tidy
presentation and sufficient detail that it is clear what you have done. All being
well, this completes your action as Executor, and you will hopefully have earned
the gratitude of the beneficiaries.
If you do receive a legal challenge over your work, perhaps from a beneficiary
who feels they have not been fairly treated, you should probably seek your own
professional legal advice, unless you feel confident enough to at least attempt
your own resolution. In that latter case, at least keep a records or anything that
is agreed, and have the other party sign the agreement.
Conclusion

In summary, provided the Estate is not too complex, it is possible for the
organised and honest person, who is reasonably financially literate, to complete
both the inheritance tax and Probate work themselves, and deal with both HMRC
and MHCTS without calling in specialist help, at least until the point that a
property sale arises, at which point specialist legal assistance is needed to
manage the sale.
The potential to save money is one obvious reason to do the work yourself. The
cost of professional support may vary with the size and complexity of the Estate,
but could easily cost thousands of pounds. The insertion of a third-party helper
also adds another logistical management layer to the process. If you hire a
lawyer they will have to ask you, and potentially other people and organisations
questions. This sort of correspondence may require a certain degree of ‘back
and forth’ and of course this may generate follow up queries and a further round
of correspondence that may iterate for another round or two, all the time racking
up additional costs, unless you have negotiated a flat fee, but in any case
probably adding a significant time delay to the process relative to what you could
have achieved yourself. There is a further motivation beyond the financial, in
that many people prefer to do things themselves, and achieve a personal
satisfaction in overcoming the problems presented along the way.
The viability of a purely DIY approach very much depends on one’s personal view
of the complexity of the Estate, how confident one feels in tackling the
complexity, and the problems that emerge along the way. This is not a process
you want to get wrong, because mistakes can cost you a lot of time and money,
so there is no shame in handing the whole business over to a professional. Be
advised though that these professionals will probably still require you to find and
provide lots of information to complete the work on your behalf.
The complexity of the work can vary enormously. At the simplest end of the
spectrum, an Estate might comprise only a small amount of cash that can be
managed with only a Death Certificate and a Will, not requiring any inheritance
tax work with HMRC, nor any work with HMCTS to obtain a Grant of Probate. At
the other end of the spectrum, the Estate might comprise millions of pounds in
various bank accounts around the world, shares in complex unlisted businesses
registered in different countries, property ownership in different nations, farm
ownership, and so on. As one journeys along this spectrum, the complexity of
managing the Estate increases, and so does the potential for making costly
mistakes. There comes a point, and this varies between individuals, when one’s
own ability to manage the Estate is not sufficient for the challenges, and it
becomes more prudent to bring in experienced and qualified tax professionals
who are specialists in the challenges you are facing. If you are having doubts
about your competence at a particular stage in the process, one option, provided
you have the patience to wait on hold, is to phone HMRC or HMCTS, explain your
position and understanding, and see if they agree.
I hope you have enjoyed reading this guide and more importantly found it
practical and helpful. Given this is a new initiative, I am not sure how many
copies will be sold. If, as I hope, I am able to issue an updated guide for the next
tax year (2025-26) I will have a better idea of the public interest in this work.
At the time of writing a new Labour Government has been elected. Rumours are
swirling about what changes they may make to the tax system, including
perhaps inheritance tax and Probate, but they have yet to release a formal
budget that confirm what, if any changes will be enforced. These periodic
financial and legal reviews and changes by the Government are why tax advice
can quickly go out of date, and needs to be updated to be kept relevant.
Any profits generated will be given to charity, or range of charities, connected
with helping other people struggling with bereavement problems.