How to Complete Form IHT403: Gifts, Exemptions, and Deadlines

To complete HMRC Form IHT403, work through its numbered questions in order, listing every gift or transfer the deceased made on or after 18 March 1986 with its date, recipient, description, value at the date of the gift, and any exemption claimed, then attach the finished schedule to the IHT400 and send both to HMRC within 12 months of the date of death.1HM Revenue & Customs. Inheritance Tax: gifts and other transfers of value (IHT403) The form is eight pages long and was last updated in April 2026. Download the current version from GOV.UK and read the guidance in the IHT400 Notes booklet before you start; the form itself directs you there.2HM Revenue and Customs. HMRC Form IHT403

What Has To Go on the Form

IHT403 captures four distinct categories of lifetime transfer, and you need to identify which apply before you start filling in figures.

Gifts made within seven years of death are the main category. Any gift made in the seven years before the person died may be taxable; if the donor survived seven full years, the gift drops out of the inheritance tax picture entirely.3GOV.UK. How Inheritance Tax works: thresholds, rules and allowances

Gifts with reservation of benefit have to be reported regardless of when they were made. This covers cases where the deceased gave an asset away but kept using or enjoying it — the classic example is transferring a home to a child while continuing to live there rent-free.4GOV.UK. Passing on a home

Chargeable lifetime transfers include gifts into most types of trust. If the value transferred exceeded the nil-rate band of £325,000 (frozen at that level through April 2030), inheritance tax was due at the time of the transfer and may be recalculated when the donor dies.5HM Revenue & Customs. Inheritance Tax thresholds and interest rates

Pre-owned assets also belong on the form. If the deceased contributed to the purchase of an asset held by someone else and received a benefit from that asset, it must be disclosed.2HM Revenue and Customs. HMRC Form IHT403

You also need any chargeable transfers made during the seven years before the earliest gift you list. These earlier transfers affect the cumulative total that determines how much of the nil-rate band remains available.6HM Revenue & Customs. Inheritance Tax Manual – IHTM14533 – Lifetime transfers: the charge to tax: immediately chargeable transfers: cumulation

Exemptions To Apply as You List Each Gift

The form has columns for recording which exemption applies to each gift. Applying the right ones reduces the net value that flows through to the IHT400.

Normal expenditure out of income is the exemption executors most often struggle with. The form dedicates an entire section to it and requires a full breakdown of the deceased’s income and expenditure. Without that evidence, HMRC is unlikely to accept the claim.

Working Through the Questions

Questions 1 to 6: Initial Screening

The first page is a set of yes/no questions that determine which later sections you need to complete. They cover whether the deceased made gifts, created or added to a trust, paid life assurance premiums for someone else’s benefit, benefited from a trust that ended, or made gifts you want to claim as normal expenditure out of income. Answer each honestly. A missed “yes” here means skipping an entire later section and having to re-file.

Question 7: Gifts Within Seven Years of Death

This is the main working section, running across two pages. For each gift, enter:

  • the date it was made
  • the name and relationship of the recipient
  • a description of what was given
  • the type of exemption or relief being claimed and the percentage of any relief
  • the value at the date of the gift
  • the amount of any exemption or relief deducted
  • the resulting net value

Column D captures the net value after subtracting exemptions. The total of that column is the figure carried over to box 113 of the IHT400 or box 4 of the IHT400 Calculation.2HM Revenue and Customs. HMRC Form IHT403 If there are more gifts than the form has rows for, use a continuation sheet and label it clearly.

Questions 8 to 12: Gifts With Reservation of Benefit

Questions 8 to 11 ask whether the deceased transferred an asset but continued to use, enjoy, or benefit from it, or whether the recipient never took full possession.10HM Revenue & Customs. Inheritance Tax Manual – IHTM14301 – Lifetime transfers: gifts with reservation (GWRs): requirements for a GWR Question 12 collects the details. If the deceased started paying full market rent on a gifted property, or otherwise stopped benefiting from the asset, record the date that happened. That date affects whether the reservation existed at death. If the reservation was still in place when the person died, the asset’s value at death gets added to the estate.

Questions 13 to 17: Pre-Owned Assets

This section applies where the deceased contributed to the purchase of an asset held by someone else and received a benefit from it. Questions 14 and 15 cover the two main scenarios: the deceased either elected to pay the inheritance tax charge instead of the income tax charge, or they contributed to another person’s purchase of an asset from which they then benefited. Question 16 collects the details. Question 17 totals the values from the gifts with reservation and pre-owned asset sections.

Questions 18 and 19: Earlier Chargeable Transfers

Question 18 asks whether the deceased made any chargeable transfers during the seven years before the earliest gift listed in Question 7. This matters because chargeable transfers eat into the nil-rate band. If someone put £200,000 into a discretionary trust eight years before dying and then gave £200,000 to a child five years before dying, the earlier trust transfer pushes the later gift above the £325,000 threshold. List each earlier transfer with its date, recipient, and value at Question 19.

Questions 20 to 22: Normal Expenditure Out of Income

Question 20 asks for a full income breakdown: salary, pensions, interest, investment income, rental income, annuities, and any other sources, minus income tax paid. Question 21 asks for expenditure: mortgage payments, insurance, household bills, council tax, travel costs, entertainment, holidays, nursing home fees, and anything else. Question 22 calculates the surplus or deficit. If the gifts fell within the surplus and formed part of a regular pattern, the exemption can apply.

Gathering the income and expenditure data across multiple years is often the most time-consuming part of the form. Bank statements, tax returns, and pension statements all help build the picture.

Valuing Gifted Assets

Cash gifts are straightforward. Other assets need careful valuation at the date the gift was made.

For listed shares, use the quarter-up method: take the lower of the two prices shown in the Stock Exchange Daily Official List for the relevant date (the lowest selling price and highest buying price at close), then add one quarter of the difference between them. If the stock exchange was closed on the date of the gift, use the last previous trading day’s figures or the next trading day’s figures.

Real property should be valued at market value on the date of transfer. You are not legally required to use a RICS-accredited surveyor, but HMRC is more likely to challenge a valuation from an estate agent than one from a chartered surveyor, particularly if the figure looks low against local sales data.

One point on relief: the executor does not claim taper relief on IHT403. Taper relief applies when HMRC calculates the tax due on the IHT400, and only where the cumulative value of gifts in the seven years before death exceeds the nil-rate band.3GOV.UK. How Inheritance Tax works: thresholds, rules and allowances

Where the Totals Go and How To Submit

IHT403 is not filed on its own. It goes to HMRC as part of a single package with the completed IHT400 and any other supplementary schedules the estate needs, such as IHT404 for jointly owned assets or IHT405 for property.11GOV.UK. Inheritance Tax account (IHT400) The IHT400 is an interactive PDF you fill in on screen using Adobe Reader; a partly completed version cannot be saved, so gather all your information before you start.

Post the completed package to:

Inheritance Tax
HM Revenue and Customs
BX9 1HT
United Kingdom12GOV.UK. Inheritance Tax: general enquiries

The postcode alone routes the mail; no street or city is needed. Couriers use a different address, listed on the HMRC contact page. Inheritance tax payments go to a separate payment address, not to BX9 1HT.

Deadlines, Interest, and Penalties

The IHT400 and all attached schedules, including IHT403, must reach HMRC within 12 months of the date of death.13HM Revenue & Customs. IHT400 – Inheritance Tax account Interest on unpaid inheritance tax starts running earlier: six months after the end of the month in which the person died.14GOV.UK. Pay your Inheritance Tax bill Aim to file and pay within six months to avoid interest charges.

Late filing of the IHT400 triggers an initial £100 penalty, a further £100 if the account is still outstanding between six and twelve months past the deadline, and up to £3,000 more for accounts delivered more than 12 months late.15HM Revenue & Customs. Inheritance Tax Manual – IHTM36023 – Late accounts: penalties chargeable

Errors on IHT403, such as undervaluing a gift, omitting a transfer, or misapplying an exemption, carry penalties based on the nature of the mistake:16GOV.UK. Penalties: an overview for agents and advisers

  • Careless error (failure to take reasonable care): 0% to 30% of the extra tax due
  • Deliberate error: 20% to 70% of the extra tax due
  • Deliberate and concealed: 30% to 100% of the extra tax due

Where you fall within each range depends on the quality of your disclosure. An unprompted disclosure, made before HMRC finds the mistake, pulls the penalty toward the lower end.

As of January 2026, HMRC charges 7.75% annual interest on unpaid inheritance tax.17GOV.UK. HMRC interest rates for late and early payments The rate can change, so check the GOV.UK interest rates page for the current figure.

Fixing a Mistake After You’ve Filed

If you find a missed gift or a valuation error after submitting IHT403, contact HMRC as soon as possible. An unprompted correction, made before HMRC has any reason to suspect a problem, attracts lower penalties than a disclosure made after HMRC sends a query.

For additional inheritance tax liabilities, HMRC’s Digital Disclosure Service gives a structured route: notify HMRC of your intention to disclose, receive a reference number, then submit the full disclosure and pay what you owe within 90 days.18GOV.UK. Make a voluntary disclosure to HMRC The longer you wait, the more interest accumulates and the less credit HMRC gives for cooperation when setting the penalty percentage.