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What Is an Excepted Estate and How Do I Report It?
When someone dies and their estate is below certain value thresholds or exempt from Inheritance Tax, it may qualify as an "excepted estate". If you're dealing with an excepted estate, you'll benefit from a simpler reporting process that requires less paperwork than a full Inheritance Tax return....
When someone dies and their estate is below certain value thresholds or exempt from Inheritance Tax, it may qualify as an "excepted estate". If you're dealing with an excepted estate, you'll benefit from a simpler reporting process that requires less paperwork than a full Inheritance Tax return. This article explains what an excepted estate is and how to report one.
What is an excepted estate?
An excepted estate is one that meets specific criteria set by HMRC, meaning it doesn't require a full Inheritance Tax return. These estates are either below the Inheritance Tax threshold or qualify for full exemption from tax.
The key benefit of having an excepted estate is that the reporting requirements are simpler. Instead of completing lengthy Inheritance Tax forms, you may only need to complete a shorter form or, in some cases, no form at all.
Do you need to report at all?
Not every excepted estate needs to be reported to HMRC. You only need to report the value of an excepted estate if you're applying for probate (the legal process that gives you authority to deal with someone's property, money and possessions after their death).
If the estate doesn't need probate, you don't need to complete any Inheritance Tax forms, even if it's an excepted estate. If you're unsure whether probate is needed in your situation, you should check before proceeding with any paperwork.
It's worth noting that if the deceased lived in Scotland, there's a different process entirely for dealing with their estate through the Scottish Courts and Tribunals system.
How to report an excepted estate
If you do need probate and you're dealing with an excepted estate, you'll need to complete form IHT205. This is called "Return of estate information" and is much simpler than the full Inheritance Tax account required for non-excepted estates.
Completing form IHT205
You must download and complete a paper copy of form IHT205. There isn't currently an online version of this form, so you'll need to print it out, fill it in by hand or type, and post it to HMRC.
If you need help completing the form, you can contact HMRC's Inheritance Tax helpline for guidance.
Where to send the form
The address you send the form to depends on where the deceased lived:
For England and Wales, send the IHT205 form to:
HMCTS Probate
PO Box 12625
Harlow
CM20 9QE
For Northern Ireland, send the form to:
The Probate Office
Royal Courts of Justice
Chichester Street
Belfast
BT1 3JF
Applying for probate alongside form IHT205
How you handle form IHT205 depends on whether you're applying for probate online or by post.
If you're applying for probate online
You need to use the probate online application service first, before you submit the IHT205 form. Once you've completed the online application, you'll receive a 16-digit reference number. You must include this reference number when you send the paper IHT205 form to HMRC.
If you're applying for probate by post
You should send the completed probate application form together with the IHT205 form in the same envelope to the appropriate address.
Northern Ireland probate applications
If the deceased lived in Northern Ireland, there's a different process for applying for probate, which you can access through the NI Direct website.
Before you start
Before you begin the process of reporting an excepted estate, you should check whether the estate you're dealing with actually qualifies as an excepted estate. HMRC provides a tool to help you check what type of estate you're dealing with and what reporting requirements apply.
This check is important because if the estate doesn't meet the criteria for an excepted estate, you'll need to complete a full Inheritance Tax return instead, which is a more detailed process with different forms and requirements.
Key points to remember
The excepted estate process is designed to reduce the administrative burden for smaller or fully exempt estates. The key things to remember are:
- You only need to report an excepted estate if you're applying for probate
- Form IHT205 is a paper form that must be posted to HMRC
- The address you send it to depends on where the deceased lived
- If you're applying for probate online, you must do that first and include the reference number on your IHT205 form
- Help is available from HMRC's Inheritance Tax helpline if you're struggling with the form
The excepted estate route can save considerable time and effort compared to completing a full Inheritance Tax return, so it's worth checking whether the estate you're dealing with qualifies.
Sources
This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.
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