Excepted Estate or IHT400? The Form That Adds Months

For most families the answer is no: you will not need to fill in a full IHT400. Since a change that applies to deaths on or after 1 January 2022, the large majority of estates are excepted estates, which means the figures are reported through the probate application itself rather than on a separate inheritance tax account. The old IHT205 form that families used to complete has gone. Whether your father's estate is an excepted estate, or whether it needs the full IHT400, does not depend on how daunting the paperwork looks — it depends on a short list of specific facts about what he owned, what he gave away in his lifetime, and who inherits.

The distinction matters for one reason above all others: time. An excepted estate can go almost straight to the probate registry. A full IHT400 has to be sent to HMRC first, and you have to wait a set period before you are even allowed to apply for the grant. Where a house sale is waiting on that grant, the gap between the two routes is measured in weeks, and sometimes longer.

So the question worth answering is not "which form is less work", but "which category is this estate actually in, and what single asset or gift might tip it from the simple route onto the slow one". That is what this page sets out, in the order you can check it.

The short answer: most estates are now excepted

An excepted estate is simply one that does not need a full inheritance tax account. For deaths on or after 1 January 2022, the reporting for these estates was folded into the probate process. Instead of a separate return, the personal representative gives three figures on the application: the gross value of the estate for probate, the net value for probate, and the net qualifying value for inheritance tax. If the estate is excepted, that is usually the extent of the tax reporting.

This is why so many people arrive at the process braced for the IHT400 and never have to touch it. If your father's estate is modest, or if he left everything to your mother, the odds are strong that it is excepted. The full account is the exception now, not the rule — which is the opposite of what the old forms led people to expect.

The word "excepted" does not mean the estate escapes inheritance tax. It means it escapes the full account. An estate can be excepted precisely because no tax is due on it, and understanding why no tax is due is the key to knowing which route you are on.

The three ways an estate qualifies as excepted

There are three broad routes into the excepted category, and it is worth reading all three because an estate that fails one can still qualify under another.

The low-value route. The gross value of the estate is below the inheritance tax nil-rate band. That band is currently £325,000. Where the person who died was widowed and their late spouse's allowance was entirely unused, you can often use the transfer of that unused band to stay within this route, giving a combined figure of up to £650,000 — but generally only where the whole of the first spouse's allowance is genuinely available to carry over.

The exempt route. The estate is larger than the nil-rate band, but everything above the band passes to exempt beneficiaries — a spouse or civil partner, or a charity — so no tax is actually due. An estate can be exempt on this basis up to a gross value of £3 million, provided the net chargeable value after those exemptions still falls below the nil-rate band.

The foreign-domicile route. A person who was never domiciled or treated as domiciled in the UK, and who held only limited UK assets, can qualify under a separate low-value test for their UK estate.

Source: gov.uk, Inheritance Tax: reporting an excepted estate and Rates and allowances: Inheritance Tax thresholds, published under the Open Government Licence v3.0.

Most family estates that reach us fall under the first two. A widow inheriting everything from her husband is the classic exempt estate. A parent of modest means leaving a house and some savings under the band is the classic low-value estate. Neither needs the IHT400.

What tips an estate onto the full IHT400

This is the part to read slowly, because a single overlooked item is what moves an otherwise straightforward estate onto the long route. The IHT400 is generally required where any of the following is true.

• Inheritance tax is actually payable. If the chargeable estate exceeds the available allowances and does not pass entirely to exempt beneficiaries, tax is due, and the full account is how it is calculated and paid.
• There were substantial lifetime gifts. Gifts made in the seven years before death above a set limit have to be brought into account, and once they are more than modest the excepted route closes.
• There are foreign assets above a small limit. A holiday flat abroad or an overseas bank account can be enough.
• The deceased had an interest in a trust. Even a right to income from a trust set up by someone else can take the estate over the line, particularly if the value involved is more than modest or more than one trust is involved.
• A relief is being claimed. Business relief or agricultural relief has to be claimed on the full account; you cannot claim it through the short reporting route.
• There were gifts with strings attached. A gift where the person carried on benefiting from the asset — the classic being a house given to the children while the parent kept living in it rent-free — is a gift with reservation of benefit and needs the full account.

The reason a single item matters so much is that these tests are not weighed against each other. You do not get to average out a simple estate against one awkward gift. Meet any one of the triggers and the whole estate goes onto the IHT400. That is why it pays to build a complete picture of the assets and the gifts before you decide, rather than after. If you are still tracking down what your father actually held, our guide on how to find out whether a parent had any life cover at all covers the same detective work that applies to policies, accounts and holdings you may not know about.

One point catches families out repeatedly: a lump sum from an employer's death-in-service scheme, or a pension death benefit, is often paid outside the estate at the discretion of the scheme trustees and does not count towards these figures at all. Whether a given payment is inside or outside the estate changes the sums, so it is worth being sure. We set out where the line falls in whether death in service forms part of your estate for probate.

What the IHT400 route adds to the wait

If the estate does need the full account, the sequence changes and it lengthens. With an excepted estate you apply for the grant directly. With an IHT400 you send the account to HMRC first, and you are asked to wait a set period before applying for probate so that HMRC can process it and confirm the figures to the probate registry.

The current rule is that you must wait 20 working days after submitting the IHT400 before you apply for the grant. That is roughly a month of calendar time on top of the ordinary probate queue, before your application even joins it.

Source: gov.uk, Applying for probate: before you apply, published under the Open Government Licence v3.0.

For most families that delay is an inconvenience. For a family with a house under offer it can be the difference between holding a chain together and losing it. A buyer who was told "a few weeks" and then waits three months may walk. If a sale is in prospect, read our note on how far a probate house sale can travel before the grant arrives so you can set the buyer's expectations honestly from the start, and so nobody exchanges on a timetable the estate cannot meet.

The IHT400 also carries a second, quieter delay. Where tax is due, some of it usually has to be paid before the grant is issued — and the money to pay it is frequently locked inside the very estate you cannot access without the grant. That circularity is one of the hardest parts of a taxable estate to manage, and it is worth understanding before you are standing in it.

How to work out which route you are on

You can usually settle the question yourself with a methodical afternoon, and it is worth doing before you pay anyone to do it for you.

Start by listing every asset at its value on the date of death: the house, each bank and building society account, investments, National Savings, vehicles, and personal possessions of real value. Value the house properly rather than guessing — the figure carries into the tax position and is the one HMRC is most likely to look at. Getting it wrong in either direction has consequences, which is exactly what our neighbour article on whether an executor can be penalised for valuing the house too low is about.

Then list the debts: the mortgage, any loans, credit balances and the funeral bill. Then, separately, list the lifetime gifts in the seven years before death, and note any trust the person could benefit from, any foreign asset, and any business or agricultural asset. Finally, look at who inherits, because a will leaving everything to a surviving spouse changes the answer completely.

With that in front of you the category is usually obvious. If it is close to a threshold, or if a gift or trust is in the picture, that is the point to take advice rather than to decide alone. Part of the personal representative's job is also to protect the estate against debts nobody has mentioned yet, which is why experienced executors place the statutory notice explained in our guide to advertising for hidden debts under a Section 27 notice before they distribute anything.

Why life cover in trust can keep this simpler

There is a direct link between how a life policy was arranged and which route the estate takes, and it is worth understanding while there is still time to act on it.

A life policy written in trust pays its proceeds to the trustees, not into the estate. The money reaches the family on the death certificate, without waiting for the grant, and — importantly for this question — it does not add to the value of the estate. It therefore cannot, by itself, push a low-value estate over the nil-rate band or create a tax charge that forces the IHT400.

The same policy left outside a trust does the opposite. It is paid into the estate, it inflates the estate's value, it can create or enlarge an inheritance tax bill, and it can move a straightforward estate onto the full account. The cover is identical; only the wrapper differs, and the wrapper decides all of this.

If you are reading this having realised there is either no cover in place, or cover that was never written in trust, that is something a broker can look at directly. You can get life insurance quotes and ask an FCA-authorised broker to price cover and set it up in trust so that it sits outside the estate rather than swelling it. It is a small piece of paperwork that changes both how fast the money arrives and whether the estate stays on the simple route.

Scotland and Northern Ireland

Inheritance tax is a UK-wide tax, so the excepted-estate categories, the allowances and the triggers for a full account are the same wherever the person lived. What differs is the grant that the reporting attaches to.

In Scotland the personal representative applies for confirmation rather than probate, through the sheriff court, and the estate information is presented as an inventory. The underlying tax tests are identical, but the mechanics of how the figures are filed differ, so use the Scottish guidance rather than the England and Wales pages — the Scottish Courts and Tribunals Service page on dealing with a deceased's estate in Scotland is the right starting point. In Northern Ireland the grant is obtained through the Northern Ireland Courts and Tribunals Service, again with the same inheritance tax rules; nidirect's guidance on applying for probate reflects the local process.

Whichever nation you are in, the decision tree is the same one: work out whether tax is due, whether a gift, trust, foreign asset or relief is in play, and let that tell you whether you are on the excepted route or the full account. For the wider picture — the grant, the estate's debts and the tax that has to be settled before anyone inherits — our guide to probate, the estate and inheritance tax pulls the pieces together.

Frequently asked questions

What is an excepted estate?

An excepted estate is one that does not need a full inheritance tax account. For deaths since January 2022, most such estates are reported through the probate application itself, with only limited figures required. Estates below the available allowances, or passing entirely to a spouse, civil partner or charity, commonly qualify.

What tips an estate into needing a full IHT400?

Typically inheritance tax actually being due, sizeable lifetime gifts, foreign assets, trust interests, or claims to business or agricultural relief. One overlooked gift or a small trust interest can move an otherwise straightforward estate onto the full account route, so check carefully before deciding.

How much longer does the IHT400 route take?

The account goes to HMRC first, and you must wait for its receipt before applying for the grant. That commonly adds several weeks before you even join the probate queue. Build it into any property sale timetable rather than assuming the grant follows quickly after the death.