IHT38: claiming Inheritance Tax back on property sold at a loss
HMRC form IHT38 is how executors claim Inheritance Tax back when an estate's land or buildings were sold for less than their value at death.
Who must sign it
The claim must be made by the "appropriate persons": the people liable for the Inheritance Tax on the property, usually all the executors or administrators. Every one of them must sign, in ink. HMRC does not accept an IHT38 signed only by an agent, but you can name an agent as the contact HMRC deals with.
What goes in it
- The deceased's details and the Inheritance Tax reference number.
- Every piece of land or building sold within 4 years of the death, whether it sold for more or less than its value at death: the value at death, the date of sale, the gross sale price and the buyer.
- Answers to questions about the sales: for example, whether the buyer was connected to the sellers, whether any sale was below the best price you could reasonably get, and whether you bought other property within 4 months of the last sale.
- The bank account HMRC should pay any refund into.
Time limits
- Sales must be within 4 years of the death. Sales in the fourth year only count if they are at a loss.
- The claim must be made within 4 years after the end of the 3-year period beginning on the date of death.
- You can claim provisional relief before everything is sold, but a claim cannot be withdrawn later if it turns out to be disadvantageous, so it usually pays to wait until all sales are complete.
Common reasons a claim is reduced
- Other sales within 4 years made a gain, which offsets the loss.
- The executors bought land or buildings within 4 months of the last sale.
- The property changed between death and sale (for example a lease was granted).
- HMRC (often via the District Valuer) thinks the sale price was below what could reasonably have been obtained.
How the refund is paid
HMRC pays by Faster Payment into the account given on the form, often with repayment interest. It usually decides within about 8 weeks, though more complex claims can take longer.
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Where do I get form IHT38?
IHT38 is available free on GOV.UK. You complete it, every executor signs it, and you post it to HMRC's Inheritance Tax office.
Can an accountant or agent sign IHT38 for us?
No. HMRC requires the claim to be signed by all the appropriate persons. An agent can prepare it and be named as the contact.
How long does an IHT38 claim take?
HMRC usually decides straightforward claims in about 8 weeks. Claims that need a valuation review can take longer.