From Complexity to Clarity? Unpacking the New IHT100 Forms - Ad Valorem

HMRC’s New IHT100 Forms: Simplifying the Process or Adding to the Confusion? 

If you’ve ever had to report a chargeable lifetime transfer or a trust transfer to HMRC, you might be familiar with the old IHT100 suite of forms. These forms were essential but often confusing, requiring multiple documents to report different types of events, each with its own way of calculating charges. Thankfully, HMRC has recently overhauled these forms, aiming to streamline the process. 

What Has Changed? 

Previously, reporting an inheritance tax (IHT) event meant filling out the main IHT100 form along with a separate event-specific form. These forms were multi-purpose, designed to handle a variety of situations but often led to confusion and errors due to their complexity. Each form calculated charges differently based on the event type, which was not always straightforward for the filer. 

Now, HMRC has redesigned the IHT100 forms. The main IHT100 form and the IHT100WS worksheet (used for tax calculations) have been eliminated. Their contents have been integrated into a new set of event-specific forms. This means that only one event form needs to be completed for each reportable transfer, along with any relevant supplementary forms (known as “D” forms). 

Key Forms to Know 

One of the most used forms in this suite is the IHT100D. This form is specifically used to report the principal charge, a tax that arises on the tenth anniversary of a non-interest in possession trust. This is an essential document for trustees managing these types of trusts, as it helps calculate and report the inheritance tax due to HMRC. Following the recent updates, the IHT100D form must now be prepared separately, recognizing it as a distinct event. 

Additionally, the IHT100B form has been split into two new forms: 

• IHT100B: Used for reporting a lifetime termination of a qualifying interest in possession trust. 

• IHT100B (Death): For reporting a termination on death. 

A new form, IHT100H, has also been introduced for reporting assets leaving an 18-25 (s 71D) trust. 

The Pros and Cons of the New Forms 

On the surface, these new forms are a significant improvement. They reduce the need for multiple documents and aim to simplify the reporting process. However, not all feedback has been positive. 

Since their release, users have reported several issues: 

• Formatting Errors: Some forms don’t allow decimal places where needed, leading to potential inaccuracies in financial reporting. 

• Date Format Confusion: Dates are displayed in the American format (MM/DD/YYYY), which can cause errors if not noticed. 

• Data Replication Issues: In some cases, incorrect data is automatically copied into other fields, creating additional errors that need to be corrected manually.