Skip to main content
WUHLD
← Back to glossary

Excepted Estate

Also known as: IHT Exempt Estate

Definition

An excepted estate is an estate that qualifies for simplified inheritance tax reporting to HMRC, allowing executors to apply for probate without completing the detailed IHT400 form.

This classification dramatically simplifies probate administration, saving executors 20-40 hours of work and reducing the probate timeline by 3-6 months compared to estates requiring full inheritance tax accounts.

What Does Excepted Estate Mean?

Under The Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (as amended by SI 2021/1167), excepted estates are "excepted" from delivering full inheritance tax accounts to HMRC. Three categories exist: low value (gross value under £325,000), exempt (up to £3 million with spouse or charity exemption), and foreign domiciliary (UK assets under £150,000). Approximately 95% of UK estates qualify as excepted.

Low value excepted estates qualify when gross estate value plus specified transfers doesn't exceed £325,000 (the nil-rate band). Sarah's £285,000 estate (home £220,000, savings £45,000, car £15,000, possessions £5,000) qualifies with no significant lifetime gifts.

Exempt excepted estates qualify when gross value is up to £3 million and net chargeable value after spouse or charity exemptions doesn't exceed £325,000—or £650,000 with transferable nil-rate band from a deceased spouse. David's £620,000 estate to children qualifies because he can claim his deceased wife Elizabeth's unused £325,000 nil-rate band plus his own (£650,000 total exceeds £620,000).

Foreign domiciliary excepted estates apply when the deceased wasn't UK resident at death and UK assets total £150,000 or less.

Critical disqualifying factors include: lifetime gifts exceeding £250,000 in seven years before death (excluding spouse and charity gifts), trust property over £250,000, and gifts with reservation of benefit over £250,000. Emma's £298,000 estate doesn't qualify because she made £270,000 in lifetime gifts within seven years, exceeding the £250,000 limit despite the low estate value.

Excepted estate status eliminates the 17-page IHT400 form. Executors simply report estate value when applying for probate, saving 20-40 hours. Probate typically takes 8-16 weeks for excepted estates versus 6-12 months for non-excepted estates. Professional fees are typically £1,500-£3,000 lower.

However, excepted status doesn't eliminate probate itself—you still need probate for solely-held assets like property or bank accounts over £5,000-£50,000. The simplification applies only to inheritance tax reporting.

Common Questions

"What qualifies as an excepted estate in 2025?" An estate qualifies as excepted if its gross value is below £325,000 (the nil-rate band), or up to £650,000 when transferring unused nil-rate band from a deceased spouse or civil partner, or up to £3 million if left entirely to a UK-resident spouse, civil partner, or qualifying charity. Foreign domiciliaries qualify if UK assets are under £150,000.

"Do I need to complete form IHT400 for an excepted estate?" No, you do not need to complete the full IHT400 form for an excepted estate. This is the main benefit—excepted estates qualify for simplified reporting requirements. You only need to report the estate's estimated value when applying for probate, without submitting detailed inheritance tax accounts to HMRC.

"What happens if my estate doesn't qualify as excepted?" If your estate doesn't qualify as excepted, you must complete and submit form IHT400 (full inheritance tax account) to HMRC before applying for probate, even if no tax is due. This requires detailed valuations of all assets, liabilities, and lifetime gifts, significantly extending the probate timeline by 3-6 months.

Common Misconceptions

Myth: If my estate is an excepted estate, I don't need to apply for probate at all.

Reality: Excepted estate status only simplifies inheritance tax reporting—you still need probate if the deceased owned solely-held assets like property or bank accounts over £5,000-£50,000. The only difference is you report the estate value without completing form IHT400.

Myth: Excepted estates never owe any inheritance tax.

Reality: While most excepted estates owe no inheritance tax, it's possible for an excepted estate to owe small amounts in specific circumstances—for example, on a life insurance policy or pension lump sum paid to the estate. The "excepted" classification is about simplified reporting, not tax exemption.

  • Inheritance Tax: Excepted estate is a classification within the inheritance tax system that determines reporting requirements.
  • IHT400: The full inheritance tax account form that excepted estates avoid—the primary benefit of excepted status.
  • Probate: Excepted estate status affects probate applications through simplified reporting but doesn't eliminate the requirement.
  • Grant of Probate: Excepted status determines documentation required and speeds up the timeline to obtain the grant.
  • Small Estates: Frequently confused—small estates relate to probate exemption while excepted estates relate to tax reporting.
  • Estate Administration: Excepted status affects administrative burden, timeline, and professional fees.
  • Executor: Responsible for determining excepted status and ensuring correct inheritance tax reporting.

Need Help with Your Will?

Understanding excepted estate status helps you structure your estate strategically—keeping assets below thresholds or utilizing spouse exemptions can save your executors months of complex paperwork and thousands in professional fees.

Create your will with confidence using WUHLD's guided platform. For just £99.99, you'll get your complete, legally binding will plus three expert guides. Preview your will free before paying anything—no credit card required.

Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.