Inheritance Tax Letters from HMRC Explained (UK 2026)

⚡ Frozen again: The Autumn Budget 2025 extended the freeze on inheritance tax thresholds to 2031 — and from April 2027, most unused pension pots will count towards the estate for the first time. Both changes affect the letters HMRC sends after a death.

At a glance

• The inheritance tax (IHT) threshold is £325,000 per person, plus up to £175,000 more if a home is left to children or grandchildren — both frozen until 2031.
• Only around 1 in 20 UK estates actually pays IHT, but many more estates now have to fill in the paperwork to prove they don't owe anything.
• An IHT400 is the main tax return for an estate; letters that follow it are usually a calculation, a query, or a clearance certificate.
• Any tax owed is normally due by the end of the sixth month after death — miss it and HMRC adds interest automatically.
• From April 2027, most pension pots will be pulled into the estate for IHT purposes, which is likely to generate a new wave of correspondence.
• Not legal/financial advice: This article explains the rules in plain English. For your specific situation, speak to a solicitor, a tax adviser, or Citizens Advice.

If you're dealing with someone's estate, an envelope from HMRC marked "Inheritance Tax" can be genuinely frightening to open. It usually arrives while you're also handling a funeral, notifying banks, and reading letters from the probate registry.

The good news is that most of these letters aren't a tax bill. HMRC has to check the paperwork on almost every estate going through probate, even ones that owe nothing at all. What varies is which form triggered the letter, and what HMRC needs from you next.

This guide walks through the letters and forms that make up the inheritance tax process in 2026 — what each one is checking, the numbers that actually matter, and the deadlines that catch people out.

Why HMRC is involved at all

Inheritance tax is charged on the value of someone's estate above a tax-free threshold, at 40% on everything above that line. It's collected before the estate is distributed, which is why HMRC has to be satisfied before the probate registry will issue a grant of probate letting the executor deal with the assets.

Every estate has to be reported in some form. Most are "excepted estates" — simple enough that the figures are declared as part of the probate application, with no separate tax form needed. A smaller number need the full account: an IHT400, plus supporting schedules.

The thresholds, in plain numbers

• Nil-rate band: £325,000 per person, tax-free. Frozen at this level since 2009, and now frozen until 2031 following the Autumn Budget 2025.
• Residence nil-rate band: an extra £175,000 if the deceased's home is left to children, stepchildren, or grandchildren. Also frozen until 2031.
• Married couples and civil partners can pass any unused threshold to their surviving partner, which is why you'll often see estates with a combined £1,000,000 tax-free allowance.
• Tapering: the residence nil-rate band shrinks by £1 for every £2 an estate is worth over £2,000,000, and disappears entirely above roughly £2,350,000.

Anything above the available threshold is taxed at 40% — or 36% if at least 10% of the estate is left to charity.

The forms behind the letters

You don't need to memorise HMRC's form numbers, but recognising them helps you understand what's actually being asked of you.

IHT400 — the main account

This is the core inheritance tax return, used when an estate doesn't qualify as "excepted" — usually because its value is close to or above the threshold, it includes a trust, or the deceased made significant gifts before they died. It asks for a full breakdown of assets, debts, and reliefs.

The supporting schedules

The IHT400 comes with a set of numbered schedules for different asset types, and an estate might only need a handful of them. The most common are gifts made in the seven years before death, jointly owned assets, houses and land, bank accounts, and pensions. Each one asks for evidence — valuations, statements, or a solicitor's figures — for that specific part of the estate.

IHT421 — the probate summary

This is the form HMRC sends to the probate registry once it has the IHT400 details, confirming the tax position so probate can proceed. You won't usually deal with it directly, but its progress is often what's holding up a probate application.

A calculation letter

Once HMRC has processed the IHT400, it sends a letter setting out how much tax is due, or confirming that none is owed. Check the figures against your own working — errors do happen, particularly on estates with several properties or business assets.

A clearance letter

Sometimes called an IHT30, this confirms HMRC has finished checking the estate and won't come back for more tax later (except in specific circumstances, such as a later discovery of undeclared assets). Executors often wait for this before making a final distribution, since it draws a line under their personal liability.

Dealing with probate usually means several of these letters landing at once, each with its own jargon and reference numbers. Upload any HMRC inheritance tax letter to Clarify and ask it directly what a form or figure means — with the answer pointed to the exact line it came from.

Upload your letter → getclarify.co.uk

The deadline that catches people out

Inheritance tax is normally due by the end of the sixth month after the month someone died — a death in April means payment is due by 31 October. This applies even if probate hasn't been granted yet and the estate's assets are still frozen in bank accounts.

Miss it, and HMRC adds interest automatically from the day after the deadline, whether or not you've done anything wrong. It isn't a punitive penalty — more a running cost on the unpaid balance — but it adds up on larger estates.

How executors actually pay before probate

• The Direct Payment Scheme lets banks and building societies transfer money straight to HMRC from the deceased's account, without probate being granted first.
• Instalments are available for property, land, and some business or agricultural assets — tax can be spread over 10 years, though interest still applies to the outstanding balance.
• National Savings products held by the deceased can sometimes be used to pay HMRC directly, in a similar way to the bank scheme.

What HMRC actually checks — and gets wrong

HMRC's compliance checks tend to focus on a few areas: outdated property valuations, undeclared gifts made in the seven years before death, and jointly owned assets where the ownership split isn't clear. A letter querying one of these is usually a routine check, not a sign of trouble.

Executors are personally responsible for getting the account right, so it's worth checking any HMRC calculation rather than assuming it's correct. Common mistakes include using a probate valuation instead of the date-of-death market value, missing a late spouse's transferable nil-rate band, or forgetting that some life insurance policies pay into the estate rather than straight to a beneficiary.

The pensions change coming in April 2027

Right now, most defined-contribution pension pots sit outside someone's estate for inheritance tax, which is one reason pensions are often used to pass on wealth tax-efficiently. From April 2027, that changes: unused pension funds and most death benefits will be brought into the estate and taxed like other assets.

Pension providers, rather than executors, will become responsible for reporting pension death benefits to HMRC — so if you're managing an estate after that date, expect paperwork arriving directly from pension schemes, not just banks and the Land Registry.

If HMRC has queried a figure, or you're not sure whether a schedule applies to your situation, don't guess. Ask Clarify to walk through the letter with you, section by section, with every explanation linked back to the exact wording HMRC used.

Try Clarify free → getclarify.co.uk

Frequently asked questions

Do most estates actually pay inheritance tax?

No. Roughly 1 in 20 UK estates pays any IHT, largely because of the combined threshold available to married couples and civil partners. Most estates still have to go through some form of reporting to prove that, even when no tax is owed.

What's the difference between an "excepted" and a "non-excepted" estate?

An excepted estate is simple enough — usually below the threshold, with no trusts or large lifetime gifts — that its figures are reported as part of the probate application, with no separate IHT400 needed. A non-excepted estate needs the full IHT400 account and its schedules.

How long do I have to pay inheritance tax?

Tax is due by the end of the sixth month after the month of death. A death in June, for example, means payment is due by 31 December. Interest is added automatically from the day after that deadline on anything still owed.

Can I pay inheritance tax before probate is granted?

Yes. The Direct Payment Scheme lets banks pay HMRC straight from the deceased's accounts, and some National Savings products work the same way — both without waiting for the grant of probate.

What is an IHT421 and do I need to do anything with it?

It's the form HMRC sends to the probate registry confirming the tax position on an estate, so the grant of probate can proceed. You generally don't need to submit it yourself — it moves between HMRC and the registry — but delays with it are a common reason probate applications stall.

What does a "clearance letter" actually mean?

It confirms HMRC has finished checking the estate and, barring the discovery of new information later, won't reopen the tax position. Many executors wait for this before making a final distribution to beneficiaries, since it limits their personal liability if something was missed.

Will pensions really be taxed differently from 2027?

Yes, for most defined-contribution pensions. From April 2027, unused pension funds and most death benefits will be included in the value of someone's estate for inheritance tax, changing how pensions are used in estate planning today.

What should I do if I disagree with HMRC's calculation?

Check the figures against your own valuations first — errors on property values and transferable allowances are common. If you still disagree, query it with HMRC's Inheritance Tax helpline, and involve a solicitor or tax adviser for anything beyond a straightforward correction.

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Disclaimer: This article is for general information only and does not constitute financial or legal advice. Inheritance tax depends heavily on individual circumstances, and thresholds and rules can change. For advice specific to an estate, speak to a solicitor, a qualified tax adviser, or contact Citizens Advice (citizensadvice.org.uk) or the HMRC Inheritance Tax helpline.