Which Inheritance Tax Forms Should I Use?

Although the procedure for obtaining a grant of probate, a grant of letters of administration, or a grant of letters of administration with the will annexed are identical, there are three types of inheritance tax accounts and it is essential to use the correct account. The forms and their uses are as follows:

If the person who has died lived abroad and his assets in this country were few, form IHT207 will usually be the one to use but in some cases form IHT207 will not be appropriate and form IHT400 must be used. Form IHT207 makes it clear when this is so

Form IHT is usually sufficient if the deceased was domiciled in the United Kingdom and:

The gross value of the estate does not exceed the expected estate limit. The excepted estate limit is the figure at which inheritance tax becomes payable (in the tax years 2012/2013: £325,000) unless a grant is applied before the 6th of April in the tax year in which the death took place, in which case the excepted estate limit is the inheritance tax limit set for the previous tax year

The gross value is not more than £1,000,000 and there is no tax to pay after taking into account the value of the assets inherited by exempt bodies, such as charities or the deceased’s spouse or civil partner, if the deceased and the spouse or civil partner were both born in the United Kingdom and were domiciled there throughout their lives.

The gross value of a person’s estate is the total value of his assets (before the deduction of debts and funeral expenses, but include nominated assets, his share of jointly owned assets of any trust fund from which he had a right to benefit) together with the value of any gifts made by him in:

a) the seven years before his death or

b) from which he continued to benefit and upon which he had elected not to pay pre-owned assets income tax charge or

c) from which he had reserved a benefit

Form IHT400 should be used if:

The deceased was domiciled in the United Kingdom but his estate does not fall into the above classes

The estate includes an alternatively secured pension, that is, a pension benefit in a pension scheme registered under Section 153 of the Finance Act 2004 which has been earmarked to provide benefits for a person over the age of 75 but not used to provide pension benefits or an annuity for him (known as an unsecured benefit). The scheme provider should be able to tell you whether or not this is the case

The deceased had an unsecured benefit from a pension scheme registered under Section 153 of the Finance Act 2004 and he acquired the benefit as a relevant dependant of a person who died aged 75 or over. Again the scheme provider should be able to tell you whether or not this is the case

The deceased has not taken his full retirement benefits before he died from a personal pension policy or a pension scheme of which he was a member and when he was in poor health, he changed the policy or scheme so as to make a change in or to dispose of the benefits to which he was entitled

The deceased ever bought an annuity and within seven years of his death paid premiums for a life assurance policy of which the policy monies were not payable to his estate, his spouse or civil partner

The deceased had a right to benefit from assets held in a trust (other than assets held in a single trust which do not exceed £150,000)

Within seven years of his death, the deceased gave up a right to benefit from assets valued at more than £150,000 held in trust

Within seven years of his death, the deceased made gifts (other than normal birthday, festive, or marriage gifts not exceeding £3,000 per year) totalling over £150,000

The deceased made a gift after 18th of March 1986 from which he continued to benefit or in respect of which the person who received the gift did not make full possession of it

The deceased had made an election that the pre-owned assets income change should not apply to assets he had previously owned or to the cost of which he had contributed and in either case from which he had continued to benefit

The deceased owned or benefited from assets outside the UK worth more than £100,000

If the deceased lived abroad and form IHT207 is not appropriate

The state intends to claim and benefit from any unused nil-rate inheritance tax band of a spouse or civil partner who has died before the deceased (this is done by completing form IHT402 and returning it with the completed form IHT400).

In addition to the inheritance tax accounts it is necessary to complete probate application form PA1.