B3a: IHT accounts and returns

Duty to deliver account of property and value

- Primary duty on persons liable to IHT

"(1) Except as otherwise provided by this section or by regulations under section 256 below, the personal representatives of a deceased person and every person who—

(a) is liable as transferor for tax on the value transferred by a chargeable transfer, or would be so liable if tax were chargeable on that value, or

(b) is liable as trustee of a settlement for tax on the value transferred by a transfer of value, or would be so liable if tax were chargeable on that value, or

(bb) is liable under section 199(1)(b) above for tax on the value transferred by a potentially exempt transfer which proves to be a chargeable transfer, or would be so liable if tax were chargeable on that value, or

(bc) is liable under section 200(1)(c) above for tax on the value transferred by a chargeable transfer made on death, so far as the tax is attributable to the value of property which, apart from section 102(3) of the Finance Act 1986 would not form part of the deceased's estate, or would be so liable if tax were chargeable on the value transferred on the death, or

(bd) is liable under section 201(1)(b), (c) or (d) above for tax on the value transferred by a potentially exempt transfer which is made under section 52 above and which proves to be a chargeable transfer, or would be so liable if tax were chargeable on that value, or

(c) is liable as trustee of a settlement for tax on an occasion on which tax is chargeable under Chapter III of Part III of this Act (apart from section 79), or would be so liable if tax were chargeable on the occasion,

shall deliver to the Board an account specifying to the best of his knowledge and belief all appropriate property and the value of that property." (IHTA 1984, s.216)

- Primary duty on persons liable to IHT

- No grant of representation in UK within 12 months of death: persons interested in the property liable to deliver IHT account

"(2) Where in the case of the estate of a deceased person no grant of representation or confirmation has been obtained in the United Kingdom before the expiration of the period of twelve months from the end of the month in which the death occurred—

(a) every person in whom any of the property forming part of the estate vests (whether beneficially or otherwise) on or at any time after the deceased's death or who at any such time is beneficially entitled to an interest in possession in any such property, and

(b) where any of the property is at any such time comprised in a settlement and there is no person beneficially entitled to an interest in possession in that property, every person for whose benefit any of that property (or income from it) is applied at any such time,

shall deliver to the Board an account specifying to the best of his knowledge and belief the appropriate property vested in him, in which he has an interest or which (or income from which) is applicable for his benefit and the value of that property." (IHTA 1984, s.216(2))

- No grant of representation in UK within 12 months of death: persons interested in the property liable to deliver IHT account

Excepted estates

- Three categories of excepted estates

"For deaths on or after 6 April 2004, there are three categories of excepted estate:

- low value excepted estates (IHTM06012)

- exempt excepted estates (IHTM06013), and

- for deaths on or after 6 April 2025, individuals who are not long-term UK resident (IHTM47000) or, for deaths before 5 April 2025, are foreign domiciliaries (IHTM06021)." (IHTM06011)

- Three categories of excepted estates

Excepted transfers and IIP terminations

- No requirement to deliver account of certain excepted transfers/terminations unless HMRC issue notice

"(1) Save as provided in paragraph (2), no person is required under section 216 to deliver an account of an excepted transfer or an excepted termination unless the Commissioners so require by notice in writing issued to that person.

(2) Paragraph (1) does not apply to—

(a)The duty on trustees to deliver an account under section 216(1)(b) where the transferor dies within seven years of the chargeable transfer;

(b)The duty on trustees and persons to deliver an account under section 216(1)(bb) and (bd)(1).

(3) If any person who has not delivered an account in reliance on paragraph (1) discovers at any time that the transfer is not an excepted transfer, or that the termination is not an excepted termination, the delivery to the Commissioners within six months of that time of an account of that transfer or termination shall satisfy any requirement to deliver an account imposed on that person." (SI 2008/605, Reg 3)

- No requirement to deliver account of certain excepted transfers/terminations unless HMRC issue notice

- Account deemed to be delivered for excepted transfer where HMRC do not issue notice

"Where no account of an excepted transfer is required by the Commissioners, an account of that transfer shall, for the purposes of section 264(8) (delivery of account to be treated as payment where tax rate nil), be treated as having been delivered twelve months after the end of the month in which that transfer is made." (SI 2008/605, r.8)

- Account deemed to be delivered for excepted transfer where HMRC do not issue notice

- Excepted transfer: cash/quotes securities transfer that does not cause IHT threshold to be exceeded

"(1) For the purposes of regulation 3 an excepted transfer means a chargeable transfer made on or after 6th April 2007 which is a disposition made by an individual in the circumstances in paragraph (2) or (3), but not any other transaction that is treated as a disposition for the purposes of inheritance tax.

(2) The circumstances are that—

(a)the value transferred by the chargeable transfer is attributable to either—

(i)cash; or

(ii)quoted shares or securities; and

(b)the value transferred by the chargeable transfer, together with the values transferred by any previous chargeable transfers made by the transferor during the seven years preceding the transfer does not exceed the IHT threshold." (SI 2008/605, r.4)

IHT threshold

“the IHT threshold” means the lower limit shown in the Table in Schedule 1 to the 1984 Act applicable in the year in which the chargeable transfer is made by the transferor;" (SI 2008/605, r.2)

- Excepted transfer: cash/quotes securities transfer that does not cause IHT threshold to be exceeded

- Excepted transfer: other assets transferred that does not cause 80% of IHT threshold to be exceeded etc.

[...]

(3) The circumstances are that—

(a) the value transferred by the chargeable transfer, together with the values transferred by any previous chargeable transfers made by the transferor during the seven years preceding the transfer does not exceed 80% of the IHT threshold, and

(b) the value transferred by the transfer of value giving rise to the chargeable transfer does not exceed the net IHT threshold." (SI 2008/605, Reg 4)

IHT threshold

"“the IHT threshold” means the lower limit shown in the Table in Schedule 1 to the 1984 Act applicable in the year in which the chargeable transfer is made by the transferor;" (SI 2008/605, r.2)

Net IHT threshold

"“the net IHT threshold” means the IHT threshold less the aggregate of the values transferred by all previous chargeable transfers made by the transferor during the seven years preceding the chargeable transfer;" (SI 2008/605, r.2)

- Excepted transfer: other assets transferred that does not cause 80% of IHT threshold to be exceeded etc.

- BPR and APR disregarded in calculating whether other asset transfer exceeds 80% of IHT threshold

"(4) For the purpose of paragraph (3)(b), sections 104 (business property relief) and 116 (agricultural property relief) shall not apply in determining the value transferred by the chargeable transfer." (SI 2008/605, Reg 4)

- BPR and APR disregarded in calculating whether other asset transfer exceeds 80% of IHT threshold

- Not applicable to transfer on death, deemed transfers of value or potentially exempt transfers

"As far as transfers are concerned, the regulations only apply to actual transfers of value and not to dispositions that are deemed to be transfers of value, for example, a transfer by a close company that is treated as made by the participators in the company.

The regulations only apply to the requirement to deliver an account at the time the transfer is made or the termination takes place. They do not apply to the separate requirement to deliver an account that arises on the death of the transferor within 7 years of the transfer or termination concerned, when the normal reporting requirements under IHTA84/S216 apply.

And they do not apply at all to potentially exempt transfers where there is no reporting requirement at all unless the PET fails on the death of the transferor within 7 years." (IHTM06100)

- Not applicable to transfer on death, deemed transfers of value or potentially exempt transfers

- Excepted terminations of an IIP

"(1) An excepted termination is the termination of an interest in possession in the settled property of a specified trust in any of the following circumstances.

(2) The circumstances are that—

(a)the transferor has, in connection with the termination, given to the trustees of the settlement a notice under section 57(3) informing them of the availability of the exemption; and

(b)the value transferred in consequence of the termination does not exceed the amount of the exemption specified in the notice.

(3) The circumstances are that—

(a)the value of the property in which the interest subsisted is attributable to either—

(i)cash; or

(ii)quoted shares or securities; and

(b)the value transferred in consequence of the termination, together with the values transferred by any previous chargeable transfers made by the transferor during the seven years preceding the transfer does not exceed the IHT threshold.

(4) The circumstances are that—

(a)the value transferred in consequence of the termination, together with the values transferred by any previous chargeable transfers made by the transferor during the seven years preceding the termination does not exceed 80% of the IHT threshold; and

(b)the value transferred in consequence of the termination does not exceed the net IHT threshold.

(5) For the purpose of paragraph (4)(b), sections 104 (business property relief) and 116 (agricultural property relief) shall not apply in determining the value transferred in consequence of the termination." (SI 2008/605, Reg 5)

Discharge of trustees from tax for reg 5(2) termination

"(1) This regulation applies to an excepted termination within regulation 5(2).

(2) The trustees of the settlement shall, at the expiration of the period of six months beginning with the date of the excepted termination, be discharged from any claim for tax attributable to the value of the property in which the interest subsisted unless, within that period, the Commissioners issue a notice requiring an account of that property.

(3) This regulation is subject to regulation 7." (SI 2008/605, r.6)

Failure to disclose material facts

"Regulation 6 does not—

(a) discharge any person from tax in the case of fraud or failure to disclose material facts; or

(b) affect the liability to tax of any person other than the trustees of the settlement, or tax on any property other than that in which the interest subsisted." (SI 2008/605, r.7)

- Excepted terminations of an IIP

Excepted settlements

"For all relevant property trusts other than pilot trusts (IHTM06122), there are three general conditions that have to be met first before considering whether the occasion of charge is one that falls within the excepted settlement regulations. These conditions are that:

- from the commencement of the settlement until the date of charge (or earlier death), the settlor must be and remain UK domiciled for times before 6 April 2025 and, after then, be and remain long-term UK resident.
- the trustees of the settlement are resident in the UK throughout the existence of the settlement, and
- there are no related settlements.
If the settlement fails any one of these initial conditions, it cannot qualify as an excepted settlement." (IHTM06123)

Excepted settlements

Duty discharged if account delivered by another

"(5) Except in the case of an account to be delivered by personal representatives, a person shall not be required to deliver an account under this section with respect to any property if a full and proper account of the property, specifying its value, has already been delivered to the Board by some other person who—

(a) is or would be liable for the tax attributable to the value of the property, and

(b) is not or would not be liable with him jointly as trustee;

and a person within subsection (2) above shall not be required to deliver an account under that subsection if he or another person within that subsection has satisfied the Board that an account will in due course be delivered by the personal representatives." (IHTA 1984, s.216(5))

Duty discharged if account delivered by another

Content of account

- Personal representative account must include all property in estate immediately before death or transferred in past 7 years

"(3) Subject to subsections (3A) and (3B) below, where an account is to be delivered by personal representatives (but not where it is to be delivered by a person who is an executor of the deceased only in respect of settled land in England and Wales), the appropriate property is—

(a) all property which formed part of the deceased's estate immediately before his death, other than property which would not, apart from section 102(3) of the Finance Act 1986, form part of his estate; and

(b) all property to which was attributable the value transferred by any chargeable transfers made by the deceased within seven years of his death.

(3A) If the personal representatives, after making the fullest enquiries that are reasonably practicable in the circumstances, are unable to ascertain the exact value of any particular property, their account shall in the first instance be sufficient as regards that property if it contains—

(a) a statement to that effect;

(b) a provisional estimate of the value of the property; and

(3B) The Board may from time to time give such general or special directions as they think fit for restricting the property to be specified in pursuance of subsection (3) above by any class of personal representatives." (IHTA 1984, s.216(3) - (3B))

- Personal representative account must include all property in estate immediately before death or transferred in past 7 years

- Others must include any property to which tax is or would be attributable

"(4) Where subsection (3) above does not apply the appropriate property is any property to the value of which the tax is or would be attributable." (IHTA 1984, s.216(4))

- Others must include any property to which tax is or would be attributable

- In form prescribed by HMRC

"(1) All accounts and other documents required for the purposes of this Act shall be in such form and shall contain such particulars as may be prescribed by the Board.

(2) All accounts to be delivered to the Board under this Act shall be supported by such books, papers and other documents, and verified (whether on oath or otherwise) in such manner, as the Board may require.

(3) For the purposes of this Act, an account delivered to a probate registry pursuant to arrangements made between the President of the Family Division and the Board or delivered to the Probate and Matrimonial Office in Northern Ireland pursuant to arrangements made between the [Lord Chief Justice of Northern Ireland]1 and the Board shall be treated as an account delivered to the Board." (IHTA 1984, s.257)

- In form prescribed by HMRC