Inheritance tax

Crownlyn

Hello, I am hoping someone can help.  My dad passed away in 2017 and everything went to my mum, my mum sadly passed away last week 24/09/2025 and as an only child I inherit everything as per their wills. 
I had LPOA for my mum and was in the process of selling my mums house when she got sick.
The sale was to pay care costs (she was in a home), the sale completed on the 16th September literally just a week before she passed.
She had the money from the sale of the house in her bank account (less than 500k after 220k was paid to an equity release company) plus she owned 4 flats that value £405000 so in total £900k.
I thought that my dads tax allowance went to my mum and then with her tax allowance it would be under the inheritance tax threshold but when I fill out the IHT400 form it doesn't even mention my dads tax allowance and it says I owe IHT.
Do I need to involve a solicitor or accountant to help me? 
Stupidly I wasn't on mums account as a joint account holder even though I have been controlling her money for the last year and half because she had dementia.
Any advice would be appreciated. Thank you

poppystar

When you say filling out the IHT400 are you including the associated forms that are needed to claim both the residential NRBs and your father’s NRB? There is a section at the beginning of IHT400 which guides you to which supplementary forms you need. 

Crownlyn

poppystar said:

When you say filling out the IHT400 are you including the associated forms that are needed to claim both the residential NRBs and your father’s NRB? There is a section at the beginning of IHT400 which guides you to which supplementary forms you need. 

Ah I haven't filled in the form, I just clicked the link while I was applying for probate to see if I need to pay inheritance tax.  Should I fill out the the form first? 

poseidon1

Crownlyn said:

poppystar said:

When you say filling out the IHT400 are you including the associated forms that are needed to claim both the residential NRBs and your father’s NRB? There is a section at the beginning of IHT400 which guides you to which supplementary forms you need. 

Ah I haven't filled in the form, I just clicked the link while I was applying for probate to see if I need to pay inheritance tax.  Should I fill out the the form first? 

You cannot obtain either of your parents residence nil rate bands of £175k each without doing so.

However  before you proceed with the IHT 400  and supplementaries can I ask whether you obtained RICs red book valuations when obtaining values for the investment flats? If not be aware HMRC could challenge the validity of your £405k valuation given you are very close to the  £1 million point at which the estate could tip into IHT.

If no professional valuation obtained  in this instance, this could be considered a lack of diligence from HMRC point of view. See article below in this regard:

https://www.boneandpayne.co.uk/rising-hmrc-scrutiny-why-professional-advice-is-crucial-amid-surging-inheritance-tax-investigations/

Keep_pedalling

Crownlyn said:

poppystar said:

When you say filling out the IHT400 are you including the associated forms that are needed to claim both the residential NRBs and your father’s NRB? There is a section at the beginning of IHT400 which guides you to which supplementary forms you need. 

Ah I haven't filled in the form, I just clicked the link while I was applying for probate to see if I need to pay inheritance tax.  Should I fill out the the form first? 

You are going to have to complete a full IHT return in order for claim both your mother’s residential NRB and the transferrable residential  NRB from your father’s estate even if no IHT is due. It might seem quite daunting but you should not have to employ a solicitor to do this as apart from the cost it will take a lot longer to wind up the estate.

If you get stuck you will find plenty of help and support here. I agree about the need to get a professional valuation for the rental properties, and you may need an accountant to deal with the income related to the rented properties. 

As a starting point have a read through of the IHT 400 form to get an understanding of what info is required and what supplementary sheets you are going to need to complete.

https://assets.publishing.service.gov.uk/media/686d13fda08d3a3ca3b678b4/IHT400_04_25.pdf

Crownlyn

Thank you both for your very helpful replies. I did print off a copy of the IHT400 and it does look a little daunting but I am sure I can get through it with help from mums accountant who has been doing the rental self assessment for many years and of course the links you have provided.
I asked the rental company to provide a valuation for the flats and looking at other properties close by I think they are correct but I will look into RICs red book valuation (once I've googled what they are) and get another valuation from another source if needed. They are a large established sales and letting agents so I assume it will be accepted by HMRC.
There is a lot to navigate when you are also grieving. I could kick myself for not having a joint account with my mum as it would have avoided all this.
Once again thank you.

bunnygo

sorry for your very recent loss.

assuming your parents were husband and wife, your allowances are 2 x £325k (the IHT allowance that everyone gets) and 2 x residential nil rate band each £175000, totalling £1M. You need to fill in the IHT form and the related schedules 435 and 436, plus the other related schedules for savings and any possessions.

not having a joint account does not affect this - although it does mean the accounts will now freeze. You can submit funeral bills to the bank for direct payment from the account.

you will also need proper valuations for the properties and to add the relevant schedules for those - and that's where my knowledge stops.

you can do it all yourself - it might be worth paying for an hour of solicitor advice for some of the above. You send in the IHT forms (paper process) and in a month or so you get a code which allows you to apply for probate which can be done online.

Your power of attorney has of course now ended. However make sure you keep the power of attorney as you'll need to submit that later in the process, plus the original will. You send COPIES of both with your IHT application, plus a copy of your dad's grant of probate.

At this stage, just notify the banks to freeze the accounts, take a breath and then make sure the tenants are ok and all is well there.