Excepted estates: when you do not need an IHT400

What "excepted" means

The rules are in the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (SI 2004/2543), as amended for deaths on or after 1 January 2022 by SI 2021/1167. There are three kinds of excepted estate: low-value estates, exempt estates, and estates of people who were not long-term UK residents (IHTM06011).

For an excepted estate, the executor gives the estate's values on the probate application instead of sending HMRC an IHT400 (the full "Inheritance Tax account"). If no grant of probate is needed at all, nothing has to be reported (GOV.UK, "How to value an estate").

Two terms come up throughout:

• Gross value: everything the person owned before debts, including their share of joint assets, plus gifts made in the 7 years before death (reg. 4(6)). Outright gifts of cash, quoted shares, household goods or land to individuals count after the annual, small-gift, wedding and normal-expenditure exemptions; gifts to a spouse, civil partner or charity count in full (IHTM06018, IHTM06019).
• Nil rate band: the £325,000 band taxed at 0%, frozen until 5 April 2031.

Low-value estates

An estate is a low-value excepted estate if the deceased was a long-term UK resident immediately before death (for deaths before 6 April 2025, domiciled in the UK) and the gross value does not exceed £325,000 (reg. 4(2); IHTM06012). A long-term UK resident is someone resident in the UK for at least 10 of the 20 tax years before the year of death (IHTA 1984 s.6A).

The limit rises when a late spouse's or civil partner's unused nil rate band is transferred: by the unused percentage, so to £650,000 if none of it was used (reg. 5A; IHTM06024). This works only for a claim from one earlier spouse, who was domiciled in the UK (or a long-term UK resident) and whose estate was simple. Their estate must have passed under their will or intestacy or by joint ownership, with no more than £100,000 abroad, no agricultural or business relief, and no trust, gift with reservation or chargeable lifetime gifts.

Exempt estates

An estate is an exempt excepted estate if all of these apply (reg. 4(3); IHTM06013):

• the gross value does not exceed £3,000,000;
• the "net qualifying value" does not exceed £325,000, or up to £650,000 with a transferred nil rate band (IHTM06024). This is the gross value less debts, less only spouse or civil partner exemption and charity exemption;
• something actually passes to a spouse, civil partner or charity (reg. 4(3)(ea));
• spouse exemption is counted only if both spouses have always been long-term UK residents (or domiciled in the UK before 6 April 2025), and charity exemption only for outright gifts.

GOV.UK and HMRC's manual word the £3,000,000 limit differently. GOV.UK says the estate must be worth "less than £3 million", while the regulation and IHTM06013 say the gross value must "not exceed £3,000,000". The difference matters only for an estate of exactly £3,000,000. An estate over the limit that passes wholly to a spouse is not excepted, even though no tax is due; the IHT400 Notes may then allow a shorter "reduced" IHT400.

Conditions for both kinds

• Gifts: outright gifts to individuals of the kinds listed above total no more than £250,000 over the 7 years. Any other chargeable gift in that time, such as a gift into a trust, rules the estate out (reg. 4(2)(d) and 4(3)(d); IHTM06018).
• Regular gifts out of income: in any tax year where these came to more than £3,000, the whole of that year's gifts count for this test (reg. 4(7A); IHTM06027). Gifts of £4,000 a year for 7 years add £28,000, which would take a £300,000 estate over £325,000.
• Foreign assets: no more than £100,000 gross.
• Trusts: a benefit from one trust only, worth no more than £250,000 gross. For exempt estates the limit is £1,000,000, provided no more than £250,000 of it is chargeable after spouse and charity exemption.
• No gift with reservation, meaning a gift the person kept benefiting from, and no election to treat pre-owned assets as part of the estate (IHTM06023).

The free check asks these questions in order.

People who were not long-term UK residents

A third category covers people who had never been long-term UK residents (or domiciled in the UK before 6 April 2025) and whose UK estate was only cash or quoted shares worth no more than £150,000 (reg. 4(5); IHTM06021). These estates are reported on form IHT207 and are not covered further here.

The residence nil rate band does not count

The "IHT threshold" in the regulations is the nil rate band, raised only by a transferred nil rate band (reg. 5A). The residence nil rate band, an extra band of up to £175,000 when a home goes to children or grandchildren, is not part of it, and nor is any amount transferred from a late spouse.

HMRC's Trusts and Estates Newsletter of August 2026 says the residence nil rate band and any brought-forward allowance should not be taken into account when deciding whether an estate is excepted. It adds that the transferable and downsizing allowances need to be claimed in an IHT400. HMRC is writing to agents whose excepted estate applications showed values at or around £325,000, £500,000, £650,000, £825,000 and £1 million. The residence nil rate band guide explains the claim.

Worked examples

Three hypothetical people died on 17 May 2026. Each had funeral costs of £5,000 and made no gifts.

Example 1. The gross value is over £325,000, so this is not a low-value estate. But it is under £3,000,000, and after the debts (£445,000 net) and the spouse exemption the net qualifying value is £0. The probate application would show £450,000 gross, £445,000 net and £0 net qualifying value.

Example 2. The net estate is £445,000. The nil rate band covers £325,000 and the residence nil rate band covers the other £120,000 (it is the lower of £175,000 and the £300,000 home), so no tax is due. Even so, the gross value is over £325,000 and nothing goes to a spouse or charity, so the estate is not excepted. It needs an IHT400 with Schedules IHT405, IHT406, IHT407 and IHT435. No tax reference number is needed, as there is no tax to pay.

Example 3. Her late husband's whole nil rate band can be transferred, and his estate met the conditions above, so the limit is £650,000 and £450,000 is below it. The claim is made on the probate application by 31 May 2028, which would show £450,000 gross, £445,000 net and £445,000 net qualifying value.

What you report instead

For an excepted estate, the executor applying for probate (online, or by post on form PA1P or PA1A) declares that the estate is excepted, says whether a late spouse's nil rate band is claimed, and gives three Inheritance Tax values (reg. 6; IHTM06031):

• gross value: everything owned, plus gifts in the 7 years;
• net value: the gross value less allowable debts;
• net qualifying value: the net value less spouse, civil partner and charity exemption, which can be nil.

The application also asks for gross and net values for probate, which set the fee: £526 where the estate is over £5,000 (GOV.UK, "Applying for probate"). An excepted estate does not need a code from HMRC, so the application can be made straight away.

The 2-year limit for a transferred nil rate band

In an excepted estate, the transfer of a late spouse's nil rate band is claimed on the probate application within the normal time limit: 2 years from the end of the month of death, or 3 months after the personal representatives first act if that is later (IHTA 1984 s.8B(3); IHTM06025). After that, the estate cannot be dealt with as excepted on the strength of the transfer. A late claim is at HMRC's discretion and is made on an IHT400 with Schedule IHT402; see transferring a nil rate band.

If you find more assets later

If another account, policy or gift comes to light, check the totals against the limits again. If the estate is no longer excepted, an IHT400 is due within six months of finding that out (SI 2004/2543 reg. 3(3); IHTM06034). The same six months runs from the date of a deed of variation that takes the estate outside the rules (reg. 3(4)).

If the new gross value is over £325,000 but a transferred nil rate band keeps the estate excepted, HMRC's manual says to write to HMRC with the details, confirm the claim and give the three values used for probate (IHTM06034). For the probate side, GOV.UK suggests contacting HM Courts and Tribunals Service if the value of the estate changes. If an IHT400 is needed, the step-by-step IHT400 guide follows the form box by box.

Pensions from April 2027

For deaths on or after 6 April 2027, most unused pension funds and death benefits will count towards the estate. HMRC's Technical note 2 (updated 27 August 2026) says the excepted estates regulations will be amended so that such estates can still qualify. Those amending regulations had not been published by 5 October 2026. See pensions and Inheritance Tax from April 2027.

Sources

• How to value an estate for Inheritance Tax and report its value
• Check if you need to send full details of the estate
• Applying for probate
• Inheritance Tax account (IHT400) and notes
• HMRC Inheritance Tax Manual: IHTM06011, IHTM06012, IHTM06013, IHTM06018, IHTM06019, IHTM06020, IHTM06021, IHTM06023, IHTM06024, IHTM06025, IHTM06027, IHTM06028, IHTM06031 and IHTM06034
• HMRC Trusts and Estates Newsletter: August 2026
• Technical note 2: Further information on Inheritance Tax and Pensions
• The Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (SI 2004/2543), original text, read with the amending regulations SI 2011/214 and SI 2021/1167
• Inheritance Tax Act 1984: section 6A and section 8B