Excepted estate

When Someone Dies: Excepted Estate or Full Inheritance Tax Return?

When someone dies in the UK and leaves an estate, the family needs to deal with two important processes:

• The probate application (the legal authority to deal with the estate).

• The Inheritance Tax (IHT) position, including whether the estate is an excepted estate or needs a full IHT400.

Many people say “expected estate” by mistake. The correct term is “excepted estate”. In short, an excepted estate is one where no IHT is due and the estate falls within set limits, so you do not need to send HMRC a full IHT400 account.

Before looking at an example, it is useful to understand:

• What happens when someone dies.

• What an excepted estate is.

• What the probate form and IHT400 involve.

• What information you must gather.

• When each form is due.

• Who can file them, and whether you can do this yourself.

What Happens When Someone Dies and Leaves an Estate?

When a person dies, everything they own in their own name forms their estate. This usually includes:

• A house or flat, or a share in one.

• Bank accounts, ISAs, and savings.

• Shares, investments, and premium bonds.

• Cars, jewellery, and personal possessions.

• Business interests and some life policies.

For Inheritance Tax, you also review:

• Certain gifts made in the seven years before death.

• Any trust interests where the person still benefited.

If there is a will, it normally names one or more executors. They deal with the estate.
If there is no will, the law sets out who may act as administrator (often a spouse or adult child).

In both cases, the personal representatives must:

1. Identify and value all assets and debts.

2. Decide whether Inheritance Tax is due.

3. Decide whether the estate is an excepted estate or needs a full IHT400.

4. Apply for probate (or letters of administration).

Short Explanation: What Is an Excepted Estate?

In simple terms:

An excepted estate is an estate where
– no Inheritance Tax is payable, and
– the estate sits within strict value limits and conditions, so HMRC does not require a full IHT400 account.

You still give estate values, but you give them inside the probate application instead of on a separate detailed tax return.

Now we can look at the rules in more detail.

What Is an Excepted Estate in the UK?

Under the current rules for deaths in England and Wales, an estate counts as an excepted estate if:

1. There is no IHT to pay after applying normal reliefs and allowances, and

2. The estate falls within certain value bands and conditions.

Broadly, for someone who was UK-domiciled, there are three common routes:

1. Small Estates – Within the Nil-Rate Band

The gross estate (before debts) is £325,000 or less, and there are no problem gifts, trusts, or overseas assets. The standard nil-rate band covers everything, so no IHT arises.

2. Estates up to £650,000 With Unused Nil-Rate Band

The gross estate is more than £325,000 but no more than £650,000, and:

• The deceased was a widow(er) or surviving civil partner, and

• There is some unused nil-rate band from the first spouse or civil partner that can transfer.

Between them, the two nil-rate bands can cover up to £650,000. If this covers the estate after exemptions, and the other conditions are met, the estate can be excepted.

3. Spouse and Charity Route – Estates Under £3 Million

The gross estate is less than £3 million, and the whole estate passes to:

• A UK-resident spouse or civil partner, and/or

• UK charities or other qualifying bodies.

In this case, spouse exemption and charity exemption remove any IHT. Because the beneficiaries are all exempt and the value is under £3 million, the estate can still be treated as an excepted estate.

This is the key point you wanted included:
If the whole estate goes to a spouse and/or charity and the gross estate is below £3 million, it can still be an excepted estate.

If the estate falls outside these routes, or if there are large gifts, complex trusts, or significant foreign assets, the estate is not excepted and you must complete IHT400.

Probate Application – What Is Involved and What Is Required?

In England and Wales, you apply for probate either online or with:

• Form PA1P – if there is a will.

• Form PA1A – if there is no will.

What information do you need for the probate form?

You must give clear details, including:

• Deceased’s full name, address, date of birth, and date of death.

• Marital status and details of any former spouses or civil partners.

• Names and addresses of executors or administrators.

• Details of closest family members (spouse, children, etc.).

• Basic estate values:

  • Gross estate for IHT.

  • Net estate for IHT.

  • Net estate qualifying for IHT (after spouse/charity exemptions).

• Whether the estate is excepted or whether IHT400 has been filed.

• Any foreign assets or foreign domicile issues.

You also send:

• The original will and any codicils (if there is a will).

• An official copy of the death certificate (or a coroner’s certificate).

• The probate fee.

When must the probate form be filed?

There is no fixed statutory deadline for the probate application itself. However:

• You cannot collect many assets or sell property until you have the grant.

• In practice, you should apply once you have the estate values and the IHT position clear.

• If IHT is due, you must deal with that by the relevant IHT deadlines (see below), often before probate is granted.

Who can file the probate application?

• Executors named in the will lodge the probate application.

• If there is no will, the person with the best right under the intestacy rules (often a spouse or adult child) applies for letters of administration.

• You can apply yourself, or you can instruct a solicitor or professional adviser to deal with the application on your behalf.

IHT400 – What Is Involved and What Is Required?

If the estate is not excepted, you must complete form IHT400 and any relevant schedules.

What information does IHT400 require?

IHT400 is detailed. You must provide:

• Full personal details for the deceased and for the person completing the form.

• A complete breakdown of the estate at death:

  • Property and land (UK and overseas).

  • Bank accounts, building society accounts, ISAs, and NS&I products.

  • Shares, unit trusts, and other investments.

  • Life policies, pensions with lump sums, and annuities.

  • Business interests and agricultural assets.

  • Personal belongings and valuables.

• All debts and funeral expenses.

• All lifetime gifts in the seven years before death.

• Any trust interests where the deceased had a benefit.

• Any foreign assets.

• Details of reliefs and exemptions, such as:

  • Spouse exemption.

  • Charity exemption.

  • Business Property Relief.

  • Agricultural Property Relief.

You also add separate schedules where needed, for example:

• IHT402 – to claim a transferable nil-rate band from a late spouse or civil partner.

• IHT435 – to claim the residence nil-rate band.

• IHT436 – if you claim a brought-forward RNRB from a spouse or civil partner who died earlier.

When must IHT400 be filed?

There are two important time limits:

• IHT payment date: Inheritance Tax is due by the end of the sixth month after the month of death. Interest runs after that.

• IHT400 filing date: The IHT400 account is due within 12 months of the date of death.

In practice, if any IHT is due, you often file IHT400 earlier so that HMRC can process the account and you can obtain probate without delay.

Who can file IHT400?

• Executors or administrators sign and submit IHT400.

• They can complete it themselves if they feel confident.

• However, many families use a professional (tax adviser or solicitor) where:

  • The estate is above £325,000.

  • There are mixed assets (property, investments, business).

  • There are gifts, trusts, foreign assets, or complex reliefs.

You are not required to use a professional, but advice is often sensible for larger or borderline cases.

Example: Widowed Mother, Son, and an £850,000 Property

Now that we have covered the rules, forms, deadlines, and roles, we can use a clear example.

Background

• A married couple live in England.

• The husband dies in 2009 and leaves everything to his wife. His estate pays no IHT because of the spouse exemption.

• In 2013, the widow buys a house jointly with her adult son.

Legal ownership:

• Mother: 80% of the property.

• Son: 20% of the property.

They both live in the house.

Several years later, the mother dies. Her will leaves everything to her son, including her 80% share.

Estate Values at the Date of Death

At the mother’s date of death:

• Full property value: £850,000.

• Mother’s share (80%): £680,000.

• Son’s existing share (20%): £170,000 (already his; not part of her estate).

Other assets in her sole name:

• Bank accounts and savings: £40,000.

• Investments and premium bonds: £10,000.

Gross estate for IHT:

£680,000 + £40,000 + £10,000 = £730,000

Debts and expenses:

• Funeral costs: £5,000.

• Credit card and household bills: £3,000.

Total debts: £8,000.

Net estate:

£730,000 − £8,000 = £722,000

Her will leaves everything to her son.

Is This an Excepted Estate?

First, check the excepted estate rules:

• Gross estate: £730,000 – this is above £650,000.

• The estate passes to a child, not to a spouse or charity.

• The £3 million spouse/charity route does not apply, because the son is not an exempt beneficiary.

So the estate does not qualify as:

• A small estate within £325,000.

• A £650,000 estate using an unused nil-rate band.

• A spouse/charity estate under £3 million.

Therefore, this estate is not an excepted estate.
The executor must complete IHT400 and the relevant schedules.

Does the Estate Pay Inheritance Tax?

Now use the same figures to check the tax result.

Nil-rate bands

• Mother’s own nil-rate band: £325,000.

• Husband died in 2009 and left everything to her, so his estate did not use his nil-rate band in practice.

• The executor can claim a 100% transferable nil-rate band from his estate.

Total ordinary nil-rate bands:

• £325,000 (mother)

• £325,000 (transferred)

• Total: £650,000

Residence nil-rate bands

The mother owned a qualifying home (her 80% share). She lived there and left that share to her son, a direct descendant. The estate can claim:

• Mother’s residence nil-rate band: £175,000.

• A brought-forward RNRB from the husband: £175,000, because he died before RNRB existed and his RNRB is treated as unused.

Total RNRB:

• £175,000 + £175,000 = £350,000

Apply the allowances

Net estate: £722,000.

1. Set the RNRB against the home value:

   • £722,000 − £350,000 = £372,000 remaining.

2. Set the nil-rate bands against the balance:

   • Remaining estate: £372,000.

   • Ordinary bands available: £650,000.

   • Use £372,000 of that.

   • Remaining estate after all bands: £0.

So the chargeable estate after allowances is £0, and the Inheritance Tax is £0.

What Does the Executor Actually Do?

In this example, the executor (the son) must:

1. Gather information and values for all assets and debts.

2. Complete IHT400, plus:

   • IHT402 to claim the transferable nil-rate band from the father.

   • IHT435 (and, if needed, IHT436) to claim the residence nil-rate band and the brought-forward RNRB.

3. Send IHT400 and schedules to HMRC and keep copies.

4. Once HMRC process the account, apply for probate:

   • Online, or

   • With PA1P (because there is a will).

5. Enter the gross and net estate values on the probate form and confirm that an IHT400 has been submitted.

Although no IHT is due, the estate does not meet the excepted estate conditions (because the gross value is above £650,000 and the estate does not go to a spouse or charity). A full IHT400 is therefore required.

Conclusion

When someone dies and leaves an estate in the UK, you should always work through the same sequence:

1. Value the estate – list all assets, debts, gifts, and trusts.

2. Understand the excepted estate rules – small estates up to £325,000, estates up to £650,000 with unused nil-rate band, and spouse/charity estates under £3 million.

3. Check the tax allowances – nil-rate band, transferable nil-rate band, residence nil-rate band, and any brought-forward RNRB.

4. Decide the reporting route – excepted estate via the probate form only, or a full IHT400.

5. Meet the deadlines – pay any IHT by the end of the sixth month after death and file IHT400 within 12 months.

6. Apply for probate – once the IHT position is clear and any required forms are filed.

The example of the widowed mother, her son, and the £850,000 property shows that:

• An estate can sit above £650,000,

• Fail the excepted estate test,

• Require a full IHT400,

and still pay no Inheritance Tax because the combined allowances cover the value.

You can complete the forms yourself if the estate is straightforward and you are comfortable with the figures. For larger or more complex estates, or where you rely on multiple allowances, professional help is usually a wise investment.

📞 Written by etaxfiling.co.uk

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