Form IHT403 is the schedule you file alongside form IHT400 when the person who died had given anything away. For ordinary outright gifts, the form asks about the 7 years before death. Two categories reach further back: gifts with reservation of benefit, which it asks about wherever made on or after 18 March 1986, and earlier chargeable transfers, which can affect the tax on later gifts. And some fully exempt gifts do not need to be entered at all. The 7 year rule decides what is taxed; the form's own questions decide what must be disclosed, and the two lists are not the same. Correct as at 12 September 2026.
What IHT403 actually asks for
It is a schedule, not a standalone form. It attaches to the IHT400 account and does three separate jobs.
First, it lists gifts made in the 7 years before death, with the date, the recipient, what was given and its value at the time. These are the gifts that can carry a tax charge under the 7 year rule. Most outright gifts to individuals are potentially exempt transfers. Gifts into most trusts are chargeable lifetime transfers instead, and the form also asks about earlier chargeable transfers where they affect the tax on a later gift, which can take the relevant history back up to 14 years before death.
Second, it asks about gifts with reservation of benefit: things given away while the person carried on enjoying them. The classic case is a house transferred to children while the parent went on living in it rent free. These stay in the estate regardless of how long ago the transfer happened, which is why the section has no 7 year cut-off.
Third, it collects the evidence for exemptions being claimed, most importantly regular gifts made out of income, which need income and expenditure set out year by year rather than simply asserted.
When older transfers still matter
Executors sometimes gather 7 years of bank statements, complete the form, and only then discover that a much older transfer belongs on it. That happens in two situations, and both are about the character of the transfer, not its date alone.
The first is a gift with reservation of benefit: a property transferred to children years ago where the parent stayed in occupation, or anything else given away while the person carried on enjoying it. The form asks about these wherever they were made on or after 18 March 1986, because the asset stays in the estate for as long as the benefit is kept. The second is a chargeable lifetime transfer, typically a gift into a trust. These are listed for the 7 years before death like other gifts, but an earlier chargeable transfer can also be needed where it affects the cumulation on a later gift, which is how the relevant history can reach back up to 14 years. An ordinary outright gift with no strings attached, made more than 7 years before death, does not go on the form.
Reconstructing seven years of gifts
This is the work, and it is why the form takes longer than executors expect. The person who made the gifts is not available to explain them, and bank statements do not label anything as a gift.
A workable method, in order:
- Get the full statements for every current account, savings account and investment account for the whole period, not just the last year or two. Banks will provide these to a personal representative, though it can take weeks.
- Pull out every payment that is not an obvious living cost. Standing orders to the same person, one-off transfers of round numbers, and anything to a family member's name are the candidates.
- Ask the family directly, and separately. People remember receiving money more reliably than the deceased's paperwork records giving it.
- Check for non-cash transfers: property, shares, a car, a share of a business. These are gifts and they are the ones most often missed.
Where a payment cannot be identified, say so on the form rather than guessing. An honest note that a transfer's purpose could not be established is a far better position than a figure that turns out to be wrong.
Classifying what you find
Every transfer then needs a category, because the category decides the tax.
| Category | Effect | Figures (2026/27) |
|---|---|---|
| Covered by the annual, small gifts or spouse exemption | Exempt, and the form says these need not be entered at all | £3,000 a year (one year's carry-forward), £250 per person, spouse or civil partner without limit |
| Other exempt gifts (wedding gifts, charity) | Exempt; entered with the exemption claimed against them | Wedding gifts £5,000 / £2,500 / £1,000 |
| Normal expenditure out of income | Exempt immediately, no 7 year wait | No limit, if regular, paid from income, and usual living costs still met |
| Spouse or civil partner | Exempt without limit | Both long-term UK resident |
| Potentially exempt transfer (outright gift to an individual) | Taxable only if death within 7 years | Set against the £325,000 nil-rate band, earliest gift first |
| Chargeable lifetime transfer (most gifts into trust) | Chargeable when made if above the nil-rate band, re-tested on death within 7 years, and can affect tax on later gifts | 20% lifetime rate above £325,000 |
| Gift with reservation of benefit | Remains in the estate | No time limit |
The exemption figures come from GOV.UK's rules on giving gifts. Note the small gifts trap: £250 can go to any number of people, but not to someone you have already used another allowance on in the same tax year.
The surplus income claim is the one that gets tested
Regular gifts out of income are exempt with no upper limit and no 7 year wait, which makes this the most valuable claim on the form and the one HMRC looks at hardest. GOV.UK's condition is that you "can afford the payments after meeting your usual living costs" and that they are paid "from your regular monthly income".
IHT403 asks for this year by year: income in, expenditure out, gifts made from what was left. If the deceased kept that record, the claim usually goes through. If they did not, the executors are rebuilding it after the fact from statements, and a claim assembled that way is negotiated rather than accepted.
Two things sink these claims more than any other. Gifts funded by selling investments or drawing down capital are not from income, however regular the payments looked. And a pattern that only ran for a year or two is hard to present as normal expenditure.
Example
Example. A man dies in March 2027 having made three transfers in the previous 7 years: £250,000 to his daughter four years earlier, £3,000 to his son in each of the last two tax years, and £1,000 a month to a granddaughter for six years from his pension income.
The £3,000 payments are covered by the annual exemption and carry no tax. The monthly payments total £72,000, and if the income and expenditure record supports it, they are exempt as normal expenditure out of income, immediately and in full. The £250,000 is a potentially exempt transfer. It sits below the £325,000 nil-rate band, so no tax arises on the gift itself, but it uses £250,000 of the band, leaving £75,000 for the rest of the estate.
Only two of the three go on IHT403: the £250,000 potentially exempt transfer, and the monthly payments with the surplus income claim evidenced year by year. The £3,000 payments do not need to be entered at all. The form's own instruction is: "Do not tell us about any gifts where the total value was £3,000 or less in any tax year, small amounts of £250 or less or if the gifts were made to a spouse or civil partner." The difference between a well-evidenced surplus income claim and an unevidenced one here is £72,000 of estate value, which at 40% is £28,800 of tax.
The deadline that actually constrains you
Inheritance Tax must be paid by the end of the sixth month after the person died, and GOV.UK is explicit that HMRC charges interest if you do not pay by the due date. Someone who died in January must have the tax paid by 31 July.
That deadline is what makes the gift reconstruction urgent rather than merely tedious. Bank statements take weeks to arrive, family members take time to answer, and the tax is due whether or not the picture is complete. Start the statement requests in the first fortnight, before you have any idea whether you will need them.
What to do now
If you are an executor, request the full account history for the last 7 years on day one, and ask the family whether the deceased ever transferred property or a share of a business to anyone.
If you are the one doing the giving, the single most useful thing you can leave behind is a one-page annual note: income, ordinary living costs, and what you gave to whom. It costs nothing now and it is the difference between an exemption your executors can prove and one they have to argue for. Our guides to the 7 year rule and the estate calculation cover the position while you are still able to shape it, and our probate team handles the account and the application itself.
Frequently Asked Questions
Not all of them. The form itself says: "Do not tell us about any gifts where the total value was £3,000 or less in any tax year, small amounts of £250 or less or if the gifts were made to a spouse or civil partner." Other exemptions, most importantly regular gifts out of income and wedding gifts, are entered on the schedule with the exemption claimed against them and the evidence behind the claim.
For ordinary outright gifts, the 7 years before death. Gifts with reservation of benefit reach further: the form asks about those made on or after 18 March 1986 where the person kept a benefit from what they gave away. Earlier chargeable transfers, such as gifts into trust, can also be needed where they affect the tax on a later gift.
Reconstruct what you can from bank and investment statements, ask the recipients directly, and state plainly on the form where a transfer's purpose could not be established. An honest gap is a better position than an invented figure.
The estate pays the tax on what the person still owned. Where chargeable gifts in the 7 years before death exceed the £325,000 nil-rate band, the recipients of the gifts above that threshold are primarily liable for the tax attributable to their own gifts, with taper relief where the gift was made more than 3 years before death.
By the end of the sixth month after the month of death, with interest charged after that. The deadline does not move because the gift history is still being assembled, which is why the statement requests should go out immediately.
Talk to us about the estate you are handling
If you are an executor facing a gift history you cannot piece together, or a surplus income claim you are not sure will hold, speak to Chloe Symmonds, Senior Manager. The first conversation establishes what has to be found, what can be evidenced, and what the deadline means for the estate in front of you. Call 020 8554 2135 or email info@visionconsulting.co.uk, or use our contact page.
By the Vision Consulting team.
This is general information, not advice. Your position depends on your circumstances. Speak to us before acting on anything here.