How to fill in form IHT38 — claiming loss relief on land sold after death
Form IHT38 lets the executors or administrators who paid Inheritance Tax on the deceased's land or buildings claim a refund when that property is sold at a loss within three years of death — extended to four years for a loss-making sale only — with the claim itself possible up to seven years after death.
Land relief has a rule shares relief doesn't: no claim is possible unless the value has moved by at least the lower of £1,000 or 5%, and a sale to a beneficiary or their relative may not qualify at all.
This walkthrough covers the schedule, the de minimis threshold, the connected-person exclusion, and the eight follow-up questions HMRC asks about every sale.
United Kingdom·Informational, not legal or financial advice·Verified against GOV.UK, 2026
This walkthrough takes the IHT38 form field by field, in plain English. Most of it is administrative — the difficulty is knowing which boxes actually matter, and the one most families get wrong.
The thing most people get wrong
Land relief has a minimum-movement threshold shares relief doesn't: no claim is possible if the sale price differs from the death-date value by less than the LOWER of £1,000 or 5% of that value.
A property valued at £40,000 that sells for £39,500 — a real £500 loss — doesn't qualify, because £500 is under the £1,000 floor.
Check the threshold before assuming a modest loss is claimable.
The form, in summary
Valoren
IHT38·4 pages·24 fields guided
With Valoren35 minutes
Without Valoren2–3 hours
per property · plus obtaining the Completion Statement HMRC asks for
Deadline
3 yearsto sell (4yrs if at a loss) — 7yrs to claim
IHT38 is the claim mechanism for loss relief on land and buildings under sections 190–198 of the Inheritance Tax Act 1984.
Qualifying sales must be made within 3 years of the date of death (s.191(1)(a)); section 197A extends this to 4 years, but only for a sale made at a loss — a profitable fourth-year sale doesn't qualify.
The claim itself must then be made within 4 years after the end of the 3-year sale-window period, meaning it can be made up to 7 years from death at the outer edge (s.191(1A)).
A de minimis applies: no claim is possible if the sale price differs from the death-date value by less than the LOWER of £1,000 or 5% of that value, tested per interest in land (s.191(2)) — there is no equivalent de minimis on the shares relief.
A sale to a beneficiary or a beneficiary's relative may not qualify, and a repurchase of land within 4 months of the last qualifying sale restricts the relief (s.192).
·Who Files — The 'appropriate persons' — those who paid the Inheritance Tax on the land or buildings, usually the executors or administrators — signing personally; HMRC will not accept a claim signed by an agent
·4 pages · 24 fields guided
·Draws from your Estate File — Property Folio, Legal Instruments
Section01
§11
Section 1
Before you claim — eligibility and the two deadlines
IHT38 shares IHT35's basic shape — appropriate persons, no agents, no claim without tax paid — but its timing windows are longer and worded differently. Read this before assuming the shares deadline applies here too.
01
Who is an 'appropriate person'
The people liable for the Inheritance Tax on the land or buildings — typically the executors, administrators, trustees or donees who are paying it.
If more than one group could be liable, the appropriate persons are whichever group is actually paying the tax.
02
No tax paid, no claim
As with IHT35: you cannot claim relief if no Inheritance Tax was due on delivery of the IHT account.
Without tax paid, there is no appropriate person to make the claim.
03
The sale window: 3 years, extended to 4 for a loss-making sale
Qualifying sales can be made within the 3-year period beginning on the date of death.
Sales made within 4 years of death, at a loss, are treated as if they fell within that 3-year period too — so a loss-making sale in year 4 still qualifies, even though a profitable one wouldn't.
04
The claim deadline: up to 7 years from death
The claim itself must be made within 4 years after the end of the 3-year sale-window period — which means, at the outer edge, up to 7 years from the date of death.
This is longer than the shares relief's 12-month sale window plus 4-year claim deadline — don't assume the two forms run on the same clock.
05
No agents
HMRC will not accept IHT38 signed by an agent.
Every appropriate person signs personally, in their own capacity.
IHT38 shares IHT35's basic shape — appropriate persons, no agents, no claim without tax paid — but its timing windows are longer and worded differently. Read this before assuming the shares deadline applies here too.
HM Revenue & Customs (HMRC) · IHT38❦
Section02
§22
Section 2
The £1,000 / 5% threshold
Land relief has a rule shares relief doesn't: a minimum difference in value before a claim is even possible. Check it before you file — a loss under the threshold can't be claimed, however real it is.
01
The rule
You cannot claim relief if the sale price differs from the value at death by less than £1,000, or 5% of the value at death — whichever of the two is LOWER.
This is assessed property by property, not across the whole estate.
02
A worked example
A property valued at £40,000 at death: 5% of that is £2,000, which is higher than the flat £1,000 threshold — so the LOWER figure, £1,000, is what applies.
A sale price within £1,000 of £40,000 doesn't qualify for relief, however marginal the loss.
The 5% limb only becomes the binding (lower) figure when 5% of the death value is under £1,000 — that is, for property valued below £20,000. For anything above that, £1,000 stays the operative floor.
03
Why it exists
The threshold stops trivial value movements — the kind that happen in almost any sale simply from market noise, agent negotiation, or the passage of time — generating administrative claims that cost more to process than the tax they'd recover.
Land relief has a rule shares relief doesn't: a minimum difference in value before a claim is even possible. Check it before you file — a loss under the threshold can't be claimed, however real it is.
HM Revenue & Customs (HMRC) · IHT38❦
Section03
§33
Section 3
The schedule — every property sold within 4 years
Box 1 of IHT38 is the property-by-property record of what was sold, whatever the outcome — the same 'list everything, not just the losses' principle as IHT35's shares schedule.
01
List every sale, not just the losses
Give details of ALL land and buildings sold within the 4 years after death — whether sold for more or less than the value at death.
Each row: address or description of the property and its tenure, value at the date of death, date of sale, gross sale proceeds, and the name of each purchaser.
02
The date of sale is usually exchange of contracts
In England and Wales, the date of sale is normally the date contracts are exchanged.
In Scotland, it's when the terms of the offer and qualified acceptance have been agreed in writing.
03
Gross proceeds — don't deduct costs
As with shares relief, the relief is based on the gross sale price, restricted only by the net price of any purchases (Section 5).
Don't deduct commission, stamp duty or legal fees from the sale figure — the gross sale price is usually the agreed price in the sale contract.
04
Leases with under 50 years to run
Special rules apply to a lease, or an interest in a lease, with less than 50 years unexpired at the date of death.
Show the unexpired term at the date of death alongside the property description.
05
Include a Completion Statement for every property
HMRC's own note on the form asks for a full Completion Statement for every property in the claim, to help process it quickly.
Get this from the conveyancing solicitor who handled each sale — it's the standard document confirming the final completion figures.
Box 1 of IHT38 is the property-by-property record of what was sold, whatever the outcome — the same 'list everything, not just the losses' principle as IHT35's shares schedule.
HM Revenue & Customs (HMRC) · IHT38❦
Section04
§44
Section 4
Sales to a beneficiary or their relative
Land relief has a connected-persons rule that shares relief doesn't spell out in the same way. This is one of the questions on IHT38 most likely to restrict — or void — a claim.
01
The rule
You may not be able to claim relief on a sale to a beneficiary of the estate, or to a relative of a beneficiary.
Any profit made on such a sale or exchange may also reduce the relief available on a genuinely qualifying, arm's-length sale.
02
Why HMRC asks
The concern is straightforward: a sale to a connected party isn't necessarily at the property's true open-market value, so it's a weak basis for substituting a lower figure into the estate's IHT calculation.
An arm's-length sale to an unconnected buyer is the strongest kind of evidence for a genuine loss.
03
Where this shows up on the form
Box 2, in the 'About the land and buildings' section, asks directly whether the purchaser or any relative of the purchaser had a beneficial interest in any of the sold properties between death and sale.
Answer honestly and explain — a 'yes' doesn't automatically fail the whole claim, but it needs HMRC's scrutiny of that specific sale.
Land relief has a connected-persons rule that shares relief doesn't spell out in the same way. This is one of the questions on IHT38 most likely to restrict — or void — a claim.
HM Revenue & Customs (HMRC) · IHT38❦
Section05
§55
Section 5
The follow-up questions — boxes 2 to 9
Boxes 2 to 9 are yes/no questions testing whether anything besides a straightforward arm's-length sale happened — box 2, the connected-person question, has Section 4 to itself; the other seven are below. HMRC is explicit: a 'yes' means relief may not be due, or may be restricted — but it isn't an automatic refusal.
01
Best price obtained (box 3)
Were any sale prices lower than the best price you could reasonably have obtained at the date of sale?
If yes, explain why a lower price was accepted, and state the best price you believe was reasonably achievable.
02
Further sales planned (box 4)
Do you intend to make further sales of land in the 4 years following death?
This affects whether the relief you're claiming now should be provisional (see Section 6).
03
Repurchase within 4 months (box 5)
Did you purchase any interest in land or buildings, as the appropriate person, between the death and 4 months after the last of the sales in this claim?
Important: you cannot claim relief at all if fewer than 4 months have passed since your last sale and you intend to buy land, in the same capacity, within those 4 months — wait out the window, or accept that the claim isn't ready yet.
04
Something changed between death and sale (box 6)
Was anything different about the property at the date of sale compared to the date of death — a lease granted, a right of way granted, structural damage?
Any material change between the two dates can affect whether the sale price is comparable to the death-date value.
05
Statutory compensation (box 7)
Has any statutory compensation become payable to anyone since the death, for any interest in the land or buildings in this claim — for example, compulsory purchase compensation?
06
Right to repurchase (box 8)
Have the vendors, or their relatives, acquired a right to repurchase the property that was sold?
07
Insurance proceeds (box 9)
Has anything been received since death under an insurance claim relating to the land or buildings in this claim — for instance, a payout for damage that affected the sale price?
Boxes 2 to 9 are yes/no questions testing whether anything besides a straightforward arm's-length sale happened — box 2, the connected-person question, has Section 4 to itself; the other seven are below. HMRC is explicit: a 'yes' means relief may not be due, or may be restricted — but it isn't an automatic refusal.
HM Revenue & Customs (HMRC) · IHT38❦
Section06
§66
Section 6
Repayment authority and the declaration
As with the shares relief, the last page asks where a refund should go and requires a choice between a final claim and a provisional one.
01
Repayment authority
Any refund is paid by Faster Payments to a bank account, identified by the Inheritance Tax reference number — give the account name, sort code and account number.
02
Tick box 1 if the claim is final
Tick this if you will not sell or exchange further interests in land in the 4 years after death, and/or will not purchase any interest in land in the 4 months after your last sale in this claim.
03
Tick box 2 if more is still to come
If further sales, exchanges or purchases are intended, the relief HMRC grants is provisional — you must report any further sales, exchanges or purchases to HMRC, and clearance won't be issued until the position is final.
04
Every appropriate person signs, with their capacity
Name, capacity (executor, transferee, trustee), signature and date, for up to four signatories.
As with every page of this form: it cannot be accepted if signed by an agent.
As with the shares relief, the last page asks where a refund should go and requires a choice between a final claim and a provisional one.
HM Revenue & Customs (HMRC) · IHT38❦
Section07
§77
Section 7
Before and after you claim
Two pieces of practical advice from HMRC's own notes on the form, plus what happens once the claim lands.
01
Wait until everything is sold
HMRC's own advice: don't make a claim until all the properties you intend to sell have actually been sold.
A claim for relief cannot be withdrawn once made, even if it turns out to be disadvantageous — for example, if a property you expected to sell at a loss is later sold at a small profit instead, changing the whole-claim arithmetic against you.
02
The jointly-owned discount doesn't carry over
If a property was jointly owned at death, any discount applied to reflect that joint ownership does NOT apply to your share of the sale proceeds.
This mismatch — a discounted death-date value compared against a full-share sale price — can itself make a claim disadvantageous. Model it before you claim, not after.
03
Claim before distribution
As with shares relief: if a claim is made after the interest in land has already been distributed from the estate, relief may not be available.
04
Once made, a claim stands — check before you send
Because a claim can't be withdrawn once made, get every qualifying sale's Completion Statement together and check the whole-portfolio arithmetic (Section 3) before submitting — not after.
Two pieces of practical advice from HMRC's own notes on the form, plus what happens once the claim lands.
HM Revenue & Customs (HMRC) · IHT38❦
Many people file IHT38 themselves — that is what this walkthrough is for. If the estate behind it has stopped being simple — inheritance tax to pay, a trust, foreign assets, a dispute — Signum, Valoren’s own specialist desk, can take it on, and we say so plainly: it starts with a free intake, and if you do not need us, we will tell you. Prefer an independent adviser? STEP and the Chartered Institute of Taxation both keep public member directories, and neither pays Valoren a referral fee.
FAQ
IHT38 questions, answered.
01What is form IHT38 for?›
IHT38 lets the executors or administrators who paid Inheritance Tax on the deceased's land or buildings claim relief when the property is later sold at a loss.
The sale price replaces the date-of-death value used in the estate's tax calculation.
02What's the deadline?›
Qualifying sales can be made within 3 years of the date of death — extended to 4 years, but only for a sale made at a loss.
The claim itself must be made within 4 years after that 3-year period ends, which means up to 7 years from death at the outer edge.
03Is there a minimum loss before I can claim?›
Yes. You cannot claim if the sale price differs from the value at death by less than £1,000, or 5% of the death value — whichever of the two is lower.
This is tested property by property, not across the whole estate.
04Can I sell to a family member who's also a beneficiary?›
You may not be able to claim relief on a sale to a beneficiary, or to a beneficiary's relative.
Any profit made on that sale can also reduce the relief available on a genuinely arm's-length sale elsewhere in the claim.
05What if I buy another property soon after my last qualifying sale?›
Buying an interest in land, in the same capacity as the claim, within 4 months of your last sale restricts the relief — and you cannot claim at all if fewer than 4 months have passed and you intend to buy within that window.
06Should I wait until every property is sold before claiming?›
HMRC's own guidance advises exactly that: don't claim until everything you intend to sell has been sold.
A claim can't be withdrawn once made, even if it later proves disadvantageous.
07Who can sign IHT38?›
Every appropriate person liable for the tax on the land — the executor, administrator, trustee or transferee — signing personally.
HMRC will not accept a claim signed by an agent.
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Where this fits
IHT38 is one form. The file behind it is the rest.
A land-loss claim turns on the same date-of-death figure IHT405 declared, plus a full Completion Statement for every property sold.
The Property Folio record holds the original valuation and title detail; Legal Instruments holds the IHT400/IHT405 figures the claim measures against.
When you're ready — not before — our £179 Executor's First Hour walks you through registering the death, notifying banks and pensions, and getting probate started, in the right order. The free checklist above covers the essentials; this is for when you'd rather have a hand to hold. Executor's First Hour — £179 →
HM Revenue & Customs (HMRC)·24 fields·Free to file·35 minutes with Valoren
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