Advanced Taxation (UK) · Inheritance tax: administration and payment, including the instalment option

IHT Administration: Returns, Accounts and Valuation

Updated 11 October 2026 · Fact-checked

IHT administration is the process of reporting transfers to HMRC and valuing assets. Personal representatives file an IHT400 for a death estate unless it is an excepted estate. The transferor or trustees file an IHT100 for a chargeable lifetime transfer. Assets are valued at open market value at the date of transfer.

Understand IHT Administration: Returns, Accounts and Valuation

Inheritance tax (IHT) is self-reported. HMRC does not send a bill. Someone must report the transfer, value the assets and pay the tax. In the exam, you must say who does this, what they file, when, and how the assets are valued.

On death, the personal representatives (PRs) are in charge. They are the executors named in the will, or administrators if there is no will. They collect the assets, value them, pay debts and IHT, and then distribute the estate. They report the estate to HMRC on an IHT400 account. They are personally liable for IHT on the death estate, so they must take care over valuations and deadlines.

Not every estate needs a full IHT400. An excepted estate is one where no IHT is due and the estate is simple enough that HMRC does not need the full account. Two broad groups matter. In a low-value estate, the gross estate is below the nil rate band or bands available to the deceased. That includes any transferable nil rate band, so £325,000 is the single-person nil rate band, not a fixed cut-off. An estate where the only reason no tax is due is the spouse/civil partner or charity exemption can also qualify, subject to size limits. Both groups carry further conditions, such as limits on lifetime gifts, UK domicile and the value of foreign assets. Check the facts given. Foreign assets, trusts, or a large estate usually take the estate outside these rules. Use the exam facts and do not quote limits you cannot support.

For lifetime gifts, a chargeable lifetime transfer (CLT), such as a gift to a discretionary trust, must be reported on an IHT100. Potentially exempt transfers (PETs) are not reported when made. They only matter if the donor dies within seven years. Then the PRs report them and the tax is worked out.

Valuation is the key technical point. The value of an asset is what it might reasonably be expected to fetch on a sale in the open market at the date of transfer or death. For a lifetime transfer, the value is the loss to the donor's estate. Quoted shares use the lower of two figures. Unquoted shares and related property need more careful analysis.

Key rules to remember

Tax due date: death: 6 months after the end of the month of death; Interest runs from this date if tax is unpaid. Use the interest rate stated in the question.
IHT400 filing deadline: The later of 12 months after the end of the month of death and 3 months after the PRs first begin to act; In practice the account is usually needed sooner. HMRC normally wants the IHT400 filed and the tax paid before it will issue a grant of probate. That is not an earlier legal deadline.
CLT tax due date: Transfer 6 April to 30 September: 30 April in the next tax year. Transfer 1 October to 5 April: 6 months after the end of the month of transfer; This is the tax due date for lifetime tax. Extra tax on a CLT because of death within seven years is due 6 months after the end of the month of death.
IHT100 filing deadline: 12 months after the end of the month of the CLT; The return is made by the transferor, or by the trustees.
Quoted shares valuation: Lower of (1) lower quoted price + ¼ × (higher − lower) and (2) midpoint of the highest and lowest marked bargains; Quoted share prices are usually given in pence. Convert to pounds.
Open market value: Price the asset might reasonably be expected to fetch if sold on the open market at the date; Related property rules can increase the value of a holding.
Excepted estate (low value): Gross estate below the nil rate band(s) available, including any transferable nil rate band (the nil rate band is £325,000 for one person); There are further conditions, such as limits on lifetime gifts, UK domicile and foreign assets. Other excepted estates exist, such as those where only exemptions remove the tax. Read the facts carefully.

How to solve IHT Administration: Returns, Accounts and Valuation questions

Use this method for any question on reporting, deadlines or valuation.

1Identify the event: death, CLT, PET that becomes chargeable, or a trust event. This tells you who files and which form applies.
2Name the person responsible: PRs for the death estate, the transferor or trustees for a CLT. Say that PRs are personally liable.
3Decide whether the estate is an excepted estate. Compare the gross value with the nil rate band(s) available, including any transferable nil rate band. Check for exemptions, foreign assets, trusts and lifetime gifts. If not excepted, say an IHT400 is needed.
4Work out the dates. Find the month end, then add 6 months for payment. For a death estate, the return is due at the later of 12 months after that month end and 3 months after the PRs begin to act. For a CLT, add 12 months for the IHT100 and check whether the gift falls before or after 1 October.
5Value each asset at open market value at the right date. Use the quoted shares rule, and consider related property and unquoted shares.
6Check for loss-on-sale reliefs: loss on sale of quoted shares within 12 months of death, or of land within four years of death. Separately, deduct allowable debts and funeral costs in computing the estate. These are liabilities, not valuation reliefs.
7Write the answer in the order of the requirement. State the rule, then apply it to the facts, then conclude with the date or figure.

Quickest way: Date and valuation shortcut

When to use it: Use this when the question gives dates or share prices and asks for the deadline or the value.

Write the event date and underline the month.
Move to the month end.
Add 6 months for tax and 12 months for the return.
For a CLT, ask if it falls from 6 April to 30 September. If yes, tax is due 30 April next.
For quoted shares, compute both values in pence and take the lower figure.
Convert pence to pounds and multiply by the number of shares.

Common mistakes in IHT Administration: Returns, Accounts and Valuation

Counting the 6 or 12 months from the date of death instead of from the end of the month of death.
Students forget that the rule works from the month end.
Fix: Write the month end first, then add the months.
Saying an IHT400 is always required on death.
Students forget excepted estates.
Fix: Compare the gross value with the nil rate band(s) available, including any transferable nil rate band. Check for exemptions, foreign assets and lifetime gifts before answering.
Using the wrong due date for a CLT.
Students apply the death rule of 6 months to lifetime gifts.
Fix: For a CLT made from 6 April to 30 September, the tax is due 30 April in the following year. For a CLT made 1 October to 5 April, it is 6 months after the end of the month.
Taking the higher quoted share figure or the mid price.
Students mix up the two methods or take the average of the two.
Fix: Calculate both the quarter-up value and the midpoint of marked bargains, then take the lower.
Saying that PETs must be reported when they are made.
Students confuse PETs with CLTs.
Fix: PETs are only reported if the donor dies within seven years. CLTs are reported on an IHT100.
Ignoring the personal liability of PRs.
Students focus on the numbers and skip professional advice.
Fix: State that PRs are liable for IHT on the estate, so should obtain proper valuations and keep records.

Worked examples

Example 1

(a) Amir died on 20 August 2025. His estate is not an excepted estate. His personal representatives began to act in September 2025. State when the IHT is due and when the IHT400 must be filed. (b) Before his death, on 10 June 2025, Amir made a CLT to a discretionary trust. State when the lifetime tax is due and when the IHT100 is due.

Show the solution

(a) The month of death is August 2025. The month end is 31 August 2025.
Tax is due 6 months after the month end: 28 February 2026. Interest runs from that date on unpaid tax.
The IHT400 is due at the later of 12 months after the month end (31 August 2026) and 3 months after the PRs began to act (December 2025). The later date is 31 August 2026.
In practice the PRs will usually file the IHT400 and pay tax sooner, because HMRC normally needs them before it issues a grant of probate.
(b) The CLT was made on 10 June 2025, which is between 6 April and 30 September. Tax is due on 30 April 2026.
The IHT100 is due 12 months after the end of the month of transfer. The month end is 30 June 2025, so the return is due 30 June 2026.

Answer: (a) Tax is due 28 February 2026 and the IHT400 by 31 August 2026, though the account and tax are usually needed earlier to obtain probate. (b) Lifetime tax on the CLT is due 30 April 2026 and the IHT100 by 30 June 2026.

Example 2

At death, Beth held 10,000 quoted shares in Zed plc. The quoted price was 300p to 308p. The lowest marked bargain was 301p and the highest was 307p. Value the shares for IHT.

Show the solution

Quarter-up method: 300 + ¼ × (308 − 300) = 300 + 2 = 302p.
Midpoint of marked bargains: (301 + 307) ÷ 2 = 304p.
Take the lower: 302p.
Convert to pounds and multiply: 10,000 × £3.02 = £30,200.

Answer: The shares are valued at £30,200 (302p per share).

Exam tips

Write each date as a month end first, then add the months. Show this on the page so you earn marks even if you slip on arithmetic.
If a question asks who must file, name both the person and the form. IHT400 goes with PRs on death. IHT100 goes with a CLT.
For quoted shares, always show both calculations. The marker is looking for the choice of the lower figure.
In an advice question, mention PRs' personal liability and excepted estates. Link them to the scenario, such as foreign assets or a trust.
Professional skills marks reward a clear, ordered answer. Use short headings in your answer to match each part of the requirement.

Practice questions from Inheritance tax: administration and payment, including the instalment option

IHT Administration: Returns, Accounts and Valuation: frequently asked questions

Who must file an IHT400?

The personal representatives file an IHT400 on death unless the estate is an excepted estate. A large estate, or one with foreign assets or trusts, will normally not qualify as excepted.

What is an excepted estate?

It is a death estate where no IHT is due and HMRC does not need the full account. One example is a low-value estate, where the gross estate is below the nil rate band(s) available, including any transferable nil rate band. Other cases rely on the spouse or charity exemption. Each has further conditions, such as limits on lifetime gifts, UK domicile and foreign assets.

When is IHT due on death?

Tax is due 6 months after the end of the month of death. The IHT400 is due at the later of 12 months after the end of that month and 3 months after the PRs begin to act. In practice the account and tax are usually needed before probate is granted. Interest runs on unpaid tax from the due date.

Do I report a CLT to HMRC?

Yes. A chargeable lifetime transfer is reported on an IHT100 within 12 months of the end of the month of the transfer. A PET is only reported if the donor dies within seven years.

How are shares valued for IHT?

Quoted shares take the lower of the quarter-up price and the midpoint of marked bargains. Unquoted shares are valued at open market value on a hypothetical sale, and related property rules may apply.