Inheritance Tax Act 1984
What this means for your business
- Enforced by
- HMRC
- Applies to
- United Kingdom
- On this page
- 14 compliance obligations, 1 practical guide
What you must do
14 compliance obligations under this legislation.
Management duties 2
Respond to HMRC proposals to vary inheritance‑tax undertakings
If you have given an inheritance‑tax undertaking to HMRC, you must consider any proposal from HMRC to change that undertaking and reply within six months. If you do not agree, a tax tribunal can force the change, so you need to keep records of the proposal and your response.
Respond to HMRC proposals to vary inheritance‑tax undertakings
If you have given an inheritance‑tax undertaking under sections 78 or 79, HMRC can ask you to change it. You must agree to any proposed change within six months, otherwise a tribunal may impose the variation for you. Keep written records of all proposals, your response and any tribunal directions.
Notifications 2
Notify HMRC when you want a tax review
If you have appealed a tax decision and want HMRC to review the issue, you must send HMRC a notification saying you require a review. You can only do this once for each matter and only if no other review or tribunal process is already under way.
Request HMRC's permission for a late appeal
If you miss the deadline to lodge an appeal against an HMRC decision, you must send a written request to HMRC asking them to accept a late appeal. HMRC will then tell you whether they agree; if they do not, you may need permission from a tribunal. The request must be made promptly after the reason for the delay has ended.
Other requirements 1
Take steps to resolve disputes before HMRC reviews
When HMRC is set to review a tax matter under sections 223 B or 223 C, you must first try to resolve the disagreement yourself and give HMRC any evidence or arguments you want considered. This gives your case a fair chance before HMRC makes a decision. If HMRC does decide to review, you must submit any representations within the timeframe HMRC provides.
Payments and fees 4
Pay inheritance tax by the required deadline
Unlimited fineWhen a chargeable transfer of value occurs – for example when someone dies or makes a gift that attracts inheritance tax – you (or the personal representative of the estate) must pay the tax within six months after the end of the month in which the transfer happened, unless a specific rule (e.g., transfers made 5 April‑1 October) gives a different date. The personal representative must also settle the tax when filing the estate account and can pay any death‑related tax that other liable persons ask them to cover.
Pay inheritance tax on chargeable transfers
When your business or personal assets are transferred in a way that is chargeable for inheritance tax (for example, gifts, inheritances, or certain trusts), you must calculate the value transferred and pay the tax to HMRC. The tax is due on the date specified by the tax rules, and non‑payment can lead to fines or criminal prosecution.
Pay inheritance tax on settlement assets at each ten‑year anniversary
If you are acting as a trustee of a settlement, you must calculate the value of any relevant property in the settlement immediately before each ten‑year anniversary and pay the inheritance tax charge at the rates set out in the Act. The charge applies even if the property is income or foreign‑held assets that meet the relevant conditions.
Pay the full inheritance tax bill even if jointly liable
If more than one person is named as liable for the same inheritance tax, each of you must pay the whole amount. In practice this means you cannot rely on the other liable parties to cover the tax – you must ensure the full tax is paid to HMRC.
Offences and prohibitions 2
Fail to deliver inheritance tax account
Fine up to £3,000If you are required to send an inheritance‑tax account (under sections 216 or 217) and you do not do so, you commit an offence. You will be hit with a £100 fixed penalty, a daily charge of up to £60 for each day the account is late, an extra £100 if you still haven’t sent it after six months, and potentially a further penalty of up to £3,000 if the failure continues after the anniversary of that six‑month period. No imprisonment is provided for this breach.
Provide false information to HMRC about a chargeable transfer
Fine up to £3,000If your business supplies HMRC with incorrect information or documents – either deliberately (fraud) or carelessly (negligence) – about a transfer that would normally be subject to Inheritance Tax, you commit an offence. This applies even if you are not liable for the tax on that transfer. On conviction you face a fine of up to £3,000, but no prison sentence.
Reporting and filing 3
Claim repayment of any inheritance tax overpayment within 4 years
If you discover you have paid too much inheritance tax, you must notify HMRC and ask for the excess (including any interest) to be repaid. You have to make the claim within four years of the date you made the tax payment, otherwise you lose the right to get the money back.
Correct errors in tax information and report them to HMRC
If you discover a material mistake in any tax return or document you’ve submitted to HMRC, you must fix it promptly. If you notice an error that could mean tax you (or another party you deal with) should pay is under‑paid, you must tell HMRC without delay. Failing to do so can attract a penalty.
Notify HMRC of estate‑varying instruments that raise extra tax
Fine up to £3,000If you create a legal document that changes how a deceased person's estate is dealt with and this change means more Inheritance Tax is due, you must send a copy of that document to HMRC and tell them the extra tax amount. You have to do this within six months of making the document.
Penalties for non-compliance
4 penalties under this legislation. 1 carry an unlimited fine.
Pay inheritance tax by the required deadline
Unlimited fine
Fail to deliver inheritance tax account
Fine up to £3,000
Provide false information to HMRC about a chargeable transfer
Fine up to £3,000
Fail to file inheritance tax return or provide required information
Fine up to £3,000
Practical guidance
Our guides explain how to comply with the requirements above.
Sections and provisions
407 classified provisions from this legislation.
Duties 15
- s.1 Charge on transfers.
- s.35A Variation of undertakings.
- s.64 Charge at ten-year anniversary. reference
- s.79A Variation of undertakings.
- s.205 More than one person liable. of them
- s.214 Certificates of tax paid.
- s.218A Instruments varying dispositions taking effect on death
- s.223 Late notice of appeal. HMRC
- s.223B Appellant requires review by HMRC
- s.223E Nature of review etc person in seeking
- s.226 Payment: general rules.
- s.232 Administration actions.
- s.241 Overpayments.
- s.248 Failure to remedy errors.
- s.273 Transition from estate duty.
Offences and penalties 6
Powers 11
- s.89C Disabled person's interest: powers of advancement etc
- s.89A Self-settlement by person expected to fall within the definition of “disabled person”
- s.212 Powers to raise tax.
- s.219A Power to call for documents etc.
- s.219 Power to require information.
- s.229 Payment by instalments—woodlands.
- s.230 Acceptance of property in satisfaction of tax.
- s.231 Powers to transfer property in satisfaction of tax.
- s.239 Certificates of discharge.
- s.244 Rights to address court.
- s.256 Regulations about accounts, etc.
Definitions 101
- s.2 Chargeable transfers and exempt transfers.
- s.3A Potentially exempt transfers.
- Schedule 3 GIFTS FOR NATIONAL PURPOSES, ETC.
- s.3 Transfers of value.
- s.4 Transfers on death.
- s.5 Meaning of estate. general power
- s.6C “Long-term UK resident”: bodies corporate
- s.6B “Long-term UK resident”: young persons young person
- Schedule 6 TRANSITION FROM ESTATE DUTY
- s.6 Excluded property. relevant decoration or award
- s.6A “Long-term UK resident”: individuals UK resident non-UK resident
- s.8H Meaning of “qualifying residential interest” , “qualifying former residential interest” and “residential property interest” post-occupation time
- s.8G Meaning of “brought-forward allowance” related person
- s.8FE Calculation of lost relievable amount allowance on death
- s.8A Transfer of unused nil-rate band between spouses and civil partners nil-rate band maximum
- s.8K Meaning of “closely inherited” adopted person foster parent
- s.31 Designation and undertakings. specified steps
- s.32A Associated properties. part disposal
- s.38 Attribution of value to specific gifts.
- s.39A Operation of sections 38 and 39 in cases of business or agricultural relief. the appropriate fraction the unreduced value transferred
- ... and 81 more definitions
Exemptions 106
- Schedule 4 MAINTENANCE FUNDS FOR HISTORIC BUILDINGS, ETC.
- Schedule 5 CONDITIONAL EXEMPTION: DEATHS BEFORE 7TH APRIL 1976
- s.7 Rates.
- s.8J Meaning of “inherited”
- s.8HA Qualifying former residential interest”: interests in possession
- s.10 Dispositions not intended to confer gratuitous benefit.
- s.11 Dispositions for maintenance of family.
- s.12A Pension drawdown fund not used up: no deemed disposition
- s.12 Dispositions allowable for income tax or conferring benefits under pension scheme.
- s.13 Dispositions by close companies for benefit of employees.
- s.14 Waiver of remuneration.
- s.18 Transfers between spouses or civil partners.
- s.19 Annual exemption.
- s.20 Small gifts.
- s.21 Normal expenditure out of income.
- s.22 Gifts in consideration of marriage or civil partnership.
- s.23 Gifts to charities or registered clubs.
- s.24 Gifts to political parties.
- s.24A Gifts to housing associations.
- s.25 Gifts for national purposes, etc.
- ... and 86 more exemptions