Do I Need an Accountant to Complete an Inheritance Tax Return

Introduction

Inheritance Tax is payable on estates worth more than the current thresholds set by HMRC. Executors or personal representatives are legally responsible for working out how much tax is due, submitting the correct forms, and ensuring payment is made on time.

While it is possible to complete the process yourself, Inheritance Tax rules can be complicated, particularly when the estate includes property, gifts, or investments. Whether you need an accountant depends on the size and complexity of the estate and how confident you are with financial paperwork.

When you may not need an accountant

You may be able to complete the Inheritance Tax return yourself if the estate is simple and clearly below or only slightly above the tax threshold. For example, you may not need an accountant if:

The total value of the estate is below the Inheritance Tax nil rate band, currently £325,000.

The estate qualifies for spouse or civil partner exemption.

The estate benefits from the residence nil rate band (for passing on a home to children or grandchildren).

The estate consists mainly of cash, bank accounts, or straightforward assets.

There are few or no lifetime gifts to account for.

In these situations, completing the relevant forms yourself may be manageable, especially with HMRC’s guidance notes and online calculators.

When it helps to use an accountant

Inheritance Tax becomes more complicated when the estate includes a range of assets, gifts, or trusts. You should consider hiring an accountant if:

1. The estate exceeds the tax threshold

If the value of the estate is above the £325,000 nil rate band or £500,000 if the home allowance applies, you will need to calculate and pay Inheritance Tax. An accountant can ensure all available reliefs are applied, such as spouse transfers, agricultural relief, or business property relief, which could significantly reduce the tax bill.

2. There are lifetime gifts to account for

If the deceased made gifts during the seven years before death, these may affect the tax calculation. An accountant can trace and assess which gifts qualify for exemptions, such as annual allowances or taper relief, and include them correctly on the return.

3. The estate includes property or investments

Valuing property, business shares, or overseas assets can be complex. Accountants can arrange professional valuations and ensure the figures meet HMRC’s standards, reducing the risk of a later challenge.

4. The estate involves trusts or business assets

If the deceased was a beneficiary of a trust or owned a family business, the tax position may be more complicated. Accountants experienced in trust and business tax can help determine whether reliefs apply and how to report them accurately.

5. You are unsure about deadlines or paperwork

Inheritance Tax must usually be paid within six months of the date of death, and certain forms, such as IHT400, must be submitted to HMRC. An accountant can manage deadlines, prepare the forms, and handle correspondence with HMRC on your behalf.

6. There are multiple beneficiaries or disagreements

If several beneficiaries are involved or the estate is disputed, professional help ensures that the estate is distributed correctly and transparently, reducing the risk of errors or conflict.

What an accountant can do for you

An accountant provides both technical and administrative support during the Inheritance Tax process. They can:

Identify and apply all relevant exemptions and reliefs to reduce the tax due.

Value assets, including property, investments, and business interests.

Prepare and submit the required HMRC forms (such as IHT205 or IHT400).

Calculate the total tax owed and advise on how and when to pay.

Deal directly with HMRC if queries or investigations arise.

Coordinate with solicitors handling probate to ensure consistency across legal and tax documents.

They can also help with post-death tax planning, such as using deeds of variation to redirect inheritances for tax efficiency.

How much an accountant costs

The cost of hiring an accountant depends on the estate’s size and complexity. Typical fees range from £1,000 to £5,000 for most estates, though larger or more complex cases can cost more.

Some accountants charge a fixed fee, while others charge by the hour. In many cases, the cost can be paid from the estate rather than by the executor personally.

Before agreeing to any service, ask for a written estimate and a breakdown of what is included.

The risks of doing it yourself

While HMRC provides detailed guidance, completing an Inheritance Tax return yourself carries some risks:

Misvaluation: Incorrect asset valuations can lead to HMRC challenges and possible penalties.

Missed reliefs: You might overlook valuable reliefs or exemptions that reduce the tax due.

Calculation errors: IHT calculations can be complex, especially when taper relief or multiple gifts are involved.

Late submission: Missing payment or filing deadlines can lead to interest charges or fines.

Even small mistakes can delay probate, as HMRC must confirm that tax matters are settled before a grant of probate is issued.

Example scenario

Emily is the executor for her late father’s estate, worth £800,000. It includes a family home, shares, and several gifts made in the last five years. Although she is confident managing finances, she hires an accountant to ensure all calculations are correct.

The accountant identifies that the estate qualifies for the residence nil rate band and taper relief on one of the gifts. This reduces the tax bill by £60,000, easily covering the cost of their services and ensuring the estate complies with HMRC rules.

Common mistakes to avoid

Underestimating the value of assets such as property or investments.

Forgetting to include lifetime gifts.

Missing deadlines for payment or filing.

Ignoring available reliefs like spouse exemption or business property relief.

Not keeping copies of supporting evidence and valuations.

Conclusion

You are not legally required to hire an accountant to complete an Inheritance Tax return, but their expertise can save time, reduce stress, and often lower the amount of tax payable. For small and straightforward estates, it may be manageable to handle the process yourself using HMRC’s forms and guidance.

However, for larger or more complex estates involving property, business assets, or multiple beneficiaries, an accountant can be invaluable. They ensure accuracy, apply all possible reliefs, and help you meet your legal obligations confidently and efficiently.