When someone dies, one of the questions their executors may need to consider is whether the estate has to be reported to HM Revenue & Customs for Inheritance Tax purposes.

It might seem reasonable to assume that if there is no Inheritance Tax to pay, there is no need to submit a full Inheritance Tax return.

Unfortunately, it isn’t always quite that simple.

HMRC has recently highlighted concerns that some estates are being incorrectly treated as “excepted estates” – estates which can generally proceed without a full Inheritance Tax account being submitted to HMRC.

No tax to pay doesn’t necessarily mean no tax return

There are a number of allowances and exemptions which can reduce or eliminate an Inheritance Tax liability.

Most people are familiar with the standard Nil Rate Band, currently £325,000. There is also a Residence Nil Rate Band, potentially worth up to £175,000, where a qualifying home passes to direct descendants.

Married couples and civil partners may also be able to benefit from unused allowances transferred from a spouse or civil partner who died previously.

This can mean that an estate worth considerably more than £325,000 ultimately has no Inheritance Tax to pay.

The important point, however, is that the rules determining whether tax is payable and the rules determining whether a full Inheritance Tax return is required are not identical.

Why has HMRC raised this now?

In August 2026, HMRC announced that it was contacting some professional advisers as part of what it calls its “Borderline Excepted Estates” project.

HMRC says it has identified misunderstandings about which allowances can be taken into account when deciding whether an estate qualifies as an excepted estate.

One particular area of concern is the Residence Nil Rate Band and associated transferred allowances.

Some of these allowances need to be formally claimed and cannot simply be assumed when deciding whether the estate needs to be reported.

As a result, an executor could potentially find themselves in the slightly surprising position where:

there is ultimately no Inheritance Tax to pay, but a full Inheritance Tax return still needs to be submitted.

Why does it matter?

Executors and personal representatives have a responsibility to establish the value of the deceased’s estate and deal correctly with any Inheritance Tax reporting requirements.

Getting the reporting decision wrong could cause problems later.

HMRC has warned that incorrect calculations or claims made outside the relevant time limits could potentially result in unexpected tax and penalties.

This is particularly relevant where an estate is close to one of the relevant thresholds, property valuations are uncertain, or the estate is relying upon allowances transferred from someone who died previously.

An example

Imagine an estate which includes a family home, savings and investments.

The executors calculate that the estate will not ultimately pay Inheritance Tax because the deceased’s available allowances, including allowances connected with their home or a previously deceased spouse, should cover its value.

It would be tempting to conclude:

“There’s no tax to pay, so we don’t need an Inheritance Tax return.”

But that conclusion does not necessarily follow.

The executors still need to establish which allowances are available, whether they need to be formally claimed and whether the estate meets the separate conditions for being treated as an excepted estate.

Probate isn’t just about whether tax is due

This latest HMRC announcement is a useful reminder of how complicated administering an estate can become.

For many straightforward estates, the probate and Inheritance Tax reporting process can be relatively simple. But estates involving property, previous marriages or civil partnerships, lifetime gifts, trusts, business interests or significant investments can require considerably more care.

The important question isn’t simply:

“Will there be any Inheritance Tax to pay?”

It is also:

“What needs to be reported, and what claims need to be made?”

Getting both questions right can help avoid unnecessary delays, unexpected tax liabilities and problems for executors later in the administration of the estate.

If you are dealing with an estate and are unsure about its Inheritance Tax position or the information that needs to be provided to HMRC, taking advice at an early stage can often make the probate process considerably easier.

About Kevin Barrett

Kevin Barrett leads the estate planning service at Ad Valorem Estate Planning. A qualified accountant who ran his own practice until 2025, Kevin has many years’ experience helping individuals and families plan for the future.

He provides clear, practical advice on Wills, Lasting Powers of Attorney, trusts, inheritance tax and wider estate planning, with a focus on helping clients protect their wealth, their wishes and the people who matter most.

(E) enquiries@advaloremgroup.uk (T) 01908 219100 (W) advaloremgroup.uk