An excepted estate is one where HMRC does not need a full inheritance tax account (the IHT400) because the estate is small, passes almost entirely to a spouse, civil partner or charity, or belongs to someone who was not long term UK resident with only modest UK assets. Executors still report three inheritance tax values on the probate application, and the estate stays open to HMRC questions for 60 days after the grant.

Where do the excepted estate rules come from?

IHTA 1984 section 216 requires personal representatives to deliver an account of the estate, and HMRC can dispense with that by regulations. The current rules are the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (SI 2004/2543), as amended several times, most recently by SI 2021/1167 for deaths on or after 1 January 2022. HMRC’s Inheritance Tax Manual covers them at IHTM06000 onwards. GOV.UK states that most estates are excepted estates. This page deals with deaths from 1 January 2022; earlier deaths used form IHT205 and lower limits.

There are three categories: low value estates, exempt estates, and estates of people who were not long term UK resident (for deaths before 6 April 2025, foreign domiciliaries).

When is an estate a low value excepted estate?

Under IHTM06012 the deceased must have been long term UK resident immediately before death (domiciled in the UK for deaths before 6 April 2025), and the gross value of the estate must not exceed the nil rate band. Gross value includes the deceased’s share of jointly owned assets, “specified transfers” (chargeable lifetime gifts of cash, quoted shares, personal chattels or interests in property) and “specified exempt transfers” such as gifts to a spouse or charity in the seven years before death. In addition:

  • any trust assets must be in a single trust with a gross value of no more than £250,000;
  • foreign assets must not exceed £100,000 gross;
  • specified transfers must not exceed £250,000 in chargeable value;
  • there must be no gift with reservation of benefit.

The nil rate band is the one in force at death, now £325,000. Where a widow or widower’s estate meets the conditions in IHTM06024, a claim to transfer the first spouse’s unused nil rate band can raise the limit to as much as double. GOV.UK puts the ceiling for this route at £650,000. The residence nil rate band is not part of the test, so a £450,000 estate left to children may owe nothing yet still need a full IHT400.

There is a timing quirk in IHTM06011: if death falls between 6 April and 5 August and the grant is applied for before 6 August, the nil rate band for the previous tax year applies.

When is an estate an exempt excepted estate?

IHTM06013 sets out the conditions. The gross value, including specified transfers and specified exempt transfers, must not exceed £3,000,000. After deducting allowable liabilities and only the spouse or civil partner exemption and charity exemption, the net chargeable value must not exceed the nil rate band (or double it with a transferable nil rate band claim). No other relief, such as business or agricultural relief, can be used to get under the limit. The spouse exemption only counts if both spouses have always been long term UK resident (or UK domiciled for earlier periods), and the charity gift must be absolute. Trust assets must be in one trust worth no more than £1,000,000 gross and £250,000 net after those exemptions, with the same £100,000 foreign assets and £250,000 specified transfers limits.

Debts need care. Under IHTM06028, a liability that will not actually be repaid from the estate, or one used to buy excluded property, cannot be deducted in arriving at the net figure. For relief on business assets, see inheritance tax business relief; an estate that relies on it is not excepted.

What about someone who was not long term UK resident?

IHTM06021 allows an excepted estate where, for deaths on or after 6 April 2025, the deceased was not long term UK resident and had never been UK domiciled or deemed domiciled before that date or long term resident after it, the UK estate consists only of cash or quoted shares or securities passing by will, intestacy or survivorship worth no more than £150,000 gross, gifts from UK assets did not exceed £3,000 a year in the last seven years, and there were no indirect interests in UK residential property.

What stops an estate being excepted, whatever its size?

IHTM06023 and GOV.UK list cases where full details are always needed, including where the deceased:

  • held an interest in possession in more than one trust;
  • made a gift with reservation of benefit still in place at death, or released within seven years unless it was a specified transfer;
  • elected to treat property as part of the estate instead of paying the pre owned asset charge;
  • made chargeable gifts other than specified transfers, such as gifts into a trust;
  • had a life policy paying someone other than a spouse together with an annuity, or increased a pension death lump sum while in poor health;
  • for deaths before 6 April 2025, was deemed domiciled in the UK.

Watch regular gifts. Under IHTM06027, gifts treated as normal expenditure out of income above £3,000 a year are counted in full as specified transfers for the excepted estate test, even though they remain exempt for tax.

What must executors still report?

Excepted does not mean silent. Under IHTM06031, the information goes on the probate application itself: the PA1 probate forms in England and Wales, the NIPF forms in Northern Ireland, form C1 in Scotland, or IHT207 or C5(OUK) where the deceased was not long term resident. Executors confirm the estate is excepted, say whether a transferable nil rate band is claimed, and give three inheritance tax values:

Gross value
All assets before debts, plus specified transfers and specified exempt transfers in the seven years before death.
Net value
Gross value less allowable debts, including funeral expenses.
Net qualifying value
Net value less spouse, civil partner or charity exemption; it can be nil.

Separate gross and net probate values are also given to set the probate fee. A transferable nil rate band claim must reach the probate registry within 24 months after the end of the month of death (IHTM06025). If no grant is needed, GOV.UK says the value of an excepted estate does not have to be reported, though HMRC monitors no grant cases a year after death (IHTM06048).

What happens after the grant?

Under IHTM06042 HMRC has a “prescribed period” of 60 days from the first full grant in which it can ask for more information. If it does not, everyone liable is automatically discharged from inheritance tax on the estate (IHTM06043), unless information was false or incomplete or further property later breaks the conditions. If the estate later stops qualifying, for example because values rise, a deed of variation redirects exempt assets to children, or a deducted debt is not repaid, IHTM06034 requires an IHT400 within six months of the executors finding out.

A worked example

Illustration only. Ahmed dies in 2026, a widower, long term UK resident. His estate is a £520,000 house and £60,000 of savings, all left to his children, and he made no lifetime gifts. His late wife left everything to him, so none of her nil rate band was used. Gross value is £580,000, under double the nil rate band of £650,000, so the executors claim her unused band on the probate application and the estate is a low value excepted estate. Had Ahmed given his son £40,000 two years earlier, the gross figure would include that £34,000 gift after two annual exemptions, giving £614,000, still within the limit.

Common mistakes

  • Using net instead of gross value for the low value test. Debts and the mortgage are ignored at this stage.
  • Assuming the residence nil rate band helps. It does not, so the estate needs an IHT400 if it relies on it.
  • Leaving out gifts in the seven years before death, including regular gifts from income above £3,000 a year.
  • Ignoring a second trust interest or a gift with reservation, either of which rules the estate out.
  • Not revisiting the position after a deed of variation or a late asset discovery.

If the estate is not excepted, move on to completing the IHT400. From 6 April 2027 unused pensions also count in the estate; see pensions and inheritance tax. Professionals acting as executors should also read accountants as executors and trustees.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.