In Agent Update 144, HMRC explains that it is writing to agents that recently treated an estate as an excepted estate as part of an educational exercise to “help agents and their clients get things right first time and reduce the need for downstream checks later”.

The term ‘nil rate band’ refers collectively to the following allowances: 

• the nil rate band (NRB) of up to £325,000;
• the transferable NRB (TNRB) of up to £325,000;
• the residence NRB (RNRB) of up to £175,000; and 
• the transferable RNRB (TRNRB) of up to £175,000. 

Risk of an error 

A full IHT account (IHT 400) is not required where an estate is an excepted estate. However, HMRC is concerned that, by not submitting an IHT 400, estates risk having to pay additional tax, plus interest and penalties, where it is found that: 

• valuations are inaccurate. This includes values for property, jointly-held assets, liabilities and any lifetime gifts; and/or
• the nil-rate band allowances (see above) have not been applied correctly, noting that the TNRB and the TRNRB must be claimed.  

Action required 

In Agent Update 144, HMRC suggests that agents consider submitting an IHT 400 “where there is any uncertainty about eligibility or values”.  

The letter to agents provides guidance on the nil-rate band allowances and encourages agents to review estates that have been treated as excepted. Where the agent finds that the estate did not meet the criteria, that a valuation is inaccurate, or that allowances have not been applied correctly, HMRC recommends that the agent makes a disclosure or submits an IHT 400.