Help with IHT400 form please

shell18

Hello,

Can I have some help please interpreting what HMRC are asking in this form!

IHT 400 page 12 says "You can use the simple calculation boxes 111 to 119 to work out inheritance tax as long as the following apply (lots of sentences that are not applicable to me) then it says - you do not want to pay all of the tax now and not pay by instalments on property in column B"

What on earth does this mean? It seems to contradict itself. I have read it about 20 times and even Chat GPT got in a muddle.

Any ideas? Many thanks

dales1

HMRC seem to have introduced a typo in the latest IHT400 form.

My old copy of IHT400 says "you want to pay all of the tax now and not pay by instalments …"

So perhaps you can just cross out the errant words ?

poseidon1

Just to clarify, I assume your Aunt was not previously widowed and you are completing IHT400 because her estate exceeds £325k, and IHT is therefore payable?

If so, as regards column B ( in your case IHT relating to the value of the house), your response at question 110 ( do you want to pay IHT on instalments?) may well be yes if neither you or the estate has enough cash to pay the entire IHT bill by the 6 month deadline. I assume in this regard you still live in the house and it has not yet been sold.

HMRC allow the IHT bill attributable to the net value of the house to paid over a period of 10 years by annual instalments, but interest is charged on the outstanding balance each year so this is not necessarily a cheap option. Furthermore the instalment option ceases the moment the house is sold when all the deferred IHT then falls due.

IHT on other non property assets is strictly due at the 6 month point after death with no instalment option.

So simple question, having presuemably estimated the total IHT payable, do you intially need the property instalment option to spread that IHT cost for up to 10 years?

shell18

https://forums.moneysavingexpert.com/discussion/comment/81934455#Comment_81934455

I gather that it is my responsibility as Executor of the estate to ensure that all assets are kept in good order. The boiler has broken and some of the guttering fell off when we had heavy rain. Therefore, I want to use some cash to replace those and therefore pay for IHT on property in instalments. Other IHT due will obviously be paid immediately. House is to be put on the market within the next 14 days. Is this acceptable?

shell18

https://forums.moneysavingexpert.com/discussion/comment/81934444#Comment_81934444

That makes more sense! Thanks

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81934594#Comment_81934594

Certainly up to you if wish to spend money tidying up the property pre sale, others in a similar situation might only do the bare necessities prior to selling.

Electing for the instalment option means only having to find 10% of the property related IHT upfront, so would seem to make sense for the funds you wish to conserve at this point.

However bear in mind the HMRC interest on unpaid tax is running at 7.75% annually at the moment, possibly not too much of an issue if you manage to achieve a sale in the coming year.

Depending on how much the property actually sells for ( compared to probate value) , you might want to revisit the probate figure ( for an IHT refund) if the property sells for less than probate.