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How to complete IHT416: loans and debts owed to the deceased at death

Any money someone owed the deceased at the date of death is an asset of the estate — a creditor right that the executor steps into.

The most common example in family estates is an informal loan to a child or other relative.

These are genuine assets even if everyone assumed they would never be repaid.

This walkthrough covers what counts as a recoverable debt, what happens with loans to family, the effect of the Limitation Act on old debts, and how to value a debt that may be irrecoverable.

✓ Official source checked 2 September 2026 · GOV.UK last revised this form 4 April 2014IHT416 on GOV.UK
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United KingdomInformational, not legal or financial adviceOfficial source: GOV.UK
Official form · always current

This is the same official IHT416 file HM Revenue & Customs publishes on GOV.UK — the link below fetches the current version live from GOV.UK the moment you click it, so it can never go out of date.

Current version: April 2014 · confirmed on GOV.UK 2 September 2026

This walkthrough takes IHT416 field by field, in plain English. Money owed to the deceased is an asset of the estate, even when no one expects it back — so the hard part is telling a genuine loan (an asset to report here) from a transfer that was always meant to be a gift (which belongs on IHT403), and valuing debts that may be old, disputed, or unrecoverable.

The loan-versus-gift line that changes the form
Reporting a loan to a family member as an asset on IHT416 without checking whether it was actually a gift for IHT purposes.

HMRC looks carefully at intra-family loans.

If the loan was made without interest, without a written agreement, and with no realistic expectation of repayment, HMRC may argue it was always a gift and should go on IHT403 as a potentially exempt transfer instead.

Conversely, if the family member has already signed a deed of release writing off the debt (removing it from the estate), HMRC may challenge whether the release itself was a gift.
The form, in summary

The IHT416 form, in summary.

Valoren
IHT4162 pages14 fields guided
With Valoren15 minutes
Without Valoren30 minutes
– 2 hours · identifying and documenting each debt
Deadline
6 monthsinterest starts;
filed with IHT400
Who Files
Executoror administrator
with IHT400
£
Fee
Freeschedule to
IHT400
Filed with HMRC
Draws from your Estate File
the records this form is built from
PersonalFinancial Accounts·Legal Instruments·Digital Access Map·Asset Inventory·Income & Outgoings·Civil Dossier·Policy Index·Medical Abstract·Property Folio·Succession Plan·Digital Legacy Registry·Business Interests & Directorships·Funeral & Committal Wishes·Dependent Care & Handoff·Personal Record·RegistryMaster Registry·Renewal Register·People, Authority & Contacts·Designated Places·Kinship & Succession Map·SecureAccess Controls·Recovery Routes·Custody & Contingency·EventsDeath & Estate Activation·Incapacity & Medical Proxy·Absence & Continuity Cover·Access Loss & Identity Recovery·Legal Dispute & Evidence Protocol·Theft & Asset Compromise·Property Damage & Incident Response·Relocation & Address Update Protocol·Separation & Custody Documentation·Business Interruption & Continuity·PersonalFinancial Accounts·Legal Instruments·Digital Access Map·Asset Inventory·Income & Outgoings·Civil Dossier·Policy Index·Medical Abstract·Property Folio·Succession Plan·Digital Legacy Registry·Business Interests & Directorships·Funeral & Committal Wishes·Dependent Care & Handoff·Personal Record·RegistryMaster Registry·Renewal Register·People, Authority & Contacts·Designated Places·Kinship & Succession Map·SecureAccess Controls·Recovery Routes·Custody & Contingency·EventsDeath & Estate Activation·Incapacity & Medical Proxy·Absence & Continuity Cover·Access Loss & Identity Recovery·Legal Dispute & Evidence Protocol·Theft & Asset Compromise·Property Damage & Incident Response·Relocation & Address Update Protocol·Separation & Custody Documentation·Business Interruption & Continuity·
Legal basisStatute

IHT416 reports money that other people or organisations owed to the deceased at the date of death — loans to family members, outstanding invoices from a business, money owed under a legal judgment, or any other sum where the deceased was the creditor.

The value reported is the amount recoverable at the date of death.

A formal loan made to a family member on commercial terms (with a written loan agreement and a genuine expectation of repayment) is an asset of the estate.

An informal transfer of money that was always understood to be a gift — even if called a 'loan' — is more likely to be a potentially exempt transfer that belongs on IHT403.

Section by section

The form, section by section.

Before you start, you’ll need:
  • Who Files — The executor or administrator, as part of the IHT400 account
  • 2 pages · 14 fields guided
  • Draws from your Estate File — Financial Accounts, Legal Instruments
Section 1

What counts as a debt owed to the estate

A debt is a legally enforceable obligation for someone to pay money to the deceased.

At death, the right to collect that money passes to the executor. If the debt is genuine and collectible, it must be included as an estate asset on IHT416.

Loans to family members

The most common entry on IHT416.

If the deceased lent money to a child, sibling, or other relative — regardless of whether there was a formal written agreement — that loan is an estate asset.

The outstanding balance at the date of death (principal, plus any agreed interest) is the IHT value.

Whether the family member will actually repay it after death is a separate question from its IHT value.

Business debts and outstanding invoices

If the deceased ran a sole trader business or was a partner, outstanding invoices for work done before death are estate assets.

The amount collectible at the date of death (net of any amounts the executor reasonably believes will not be paid) is the IHT value.

Deposits and overpayments

Security deposits (for example, a tenancy deposit held by a letting agent on behalf of the deceased landlord), overpaid income tax or benefits, or amounts the deceased overpaid to HMRC are all estate assets.

HMRC tax refunds in particular can be significant — check whether a repayment was due under the deceased's final income tax return.

Loans that are really gifts

If a payment to a family member was never genuinely intended to be repaid — even if called a 'loan' — HMRC may treat it as a potentially exempt transfer (PET) reportable on IHT403, not an asset on IHT416.

The distinction matters: as an asset, the debt increases the estate's gross value; as a PET, it may reduce the nil-rate band.

The treatment depends on the facts — was there a written agreement? Did the borrower ever make repayments? Was interest charged? Would the deceased genuinely have sued for recovery?

A debt is a legally enforceable obligation for someone to pay money to the deceased.

HM Revenue & Customs (HMRC) · IHT416
Section 2

Valuing recoverable debts — when a debt is worth less than face value

Not every debt is worth 100p in the pound.

A debt owed by someone with no assets, a debt where the debtor disputes it, or a debt that is legally time-barred may be worth significantly less than its face value — or nothing at all.

Irrecoverable debts

If the person who owes the money has no assets and is unlikely ever to pay, the debt may have little or no recoverable value.

Executors can apply a discount to reflect this — but they must be able to show HMRC the basis for the discount (for example, evidence that the debtor is bankrupt, cannot be traced, or has formally refused to pay).

HMRC will not accept a discount simply because repayment is inconvenient or the family does not want to pursue it.

Statute-barred debts

A simple debt (one created by an informal agreement or an invoice) becomes statute-barred under the Limitation Act 1980 after 6 years from the date the debt was due, unless: (a) the debtor has made a payment since; or (b) the debtor has acknowledged the debt in writing since.

A deed or specialty debt (one created by a formal deed) has a 12-year limitation period.

A statute-barred debt cannot be enforced in court — it has zero legal value even if the debtor acknowledges it morally.

Report it at nil on IHT416 (and explain why).

Disputed debts

If the person who owes the money disputes the debt, there is litigation risk.

The value for IHT purposes is the probable recovery — which a solicitor or the executor must assess.

If proceedings are underway at the date of death, the best estimate of the likely recovery is the IHT value.

If the dispute is later resolved for less, HMRC can be asked to amend the IHT400.

Not every debt is worth 100p in the pound.

HM Revenue & Customs (HMRC) · IHT416

Many people file IHT416 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

IHT416 questions, answered.

IHT416 reports money that other people or organisations owed the deceased at the date of death — for example a loan to a relative, an outstanding business invoice, a security deposit, or a tax refund due.

The right to collect that money passes to the executor, so it is an asset of the estate.

It is a supporting schedule to the IHT400 account, not a standalone form.
The executor named in the will, or the administrator if there is no will, completes it as part of the IHT400 account.

You only need it if the estate has to submit a full IHT400 and the deceased was owed money at death.
It is filed with the IHT400 account, which must be delivered within 12 months of the end of the month in which the person died.

Any Inheritance Tax due is payable earlier — by the end of the sixth month, and interest runs on tax paid after that point — so it is worth identifying debts owed to the estate early.
No. IHT416 is a free schedule that forms part of the IHT400 account submitted to HMRC.

There is no separate filing fee for the form itself.
For each debt: anything showing it is genuine and what it is worth — a written loan agreement or deed of release if one exists, bank statements showing the money left the deceased's account, and a note of the balance and any agreed interest outstanding at the date of death.

Where a debt may not be recoverable (the debtor is bankrupt or untraceable) or is statute-barred, keep the evidence that supports valuing it below face value.
Reporting an informal family transfer as a loan when HMRC may treat it as a gift, or the reverse — leaving a genuine loan off the form because the family never intended to chase it.

A genuine loan is an estate asset even if repayment is unlikely; a payment never truly meant to be repaid is usually a potentially exempt transfer for IHT403.

The distinction turns on the facts, so where a debt is informal, disputed, old, or hard to value, it is worth checking HMRC's guidance and considering advice from a solicitor or tax adviser before you file.

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Where this fits

IHT416 is one form. The file behind it is the rest.

Forms are easier when the records are ready.

For IHT416, that means evidence that the debt is real and what it is worth: any written loan agreement or deed of release, the bank trail showing the money left the deceased's account, a note of the balance and any interest outstanding at the date of death, and — where a debt may be irrecoverable or statute-barred — the basis for valuing it at less than its face value.

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)14 fieldsNo separate fee15 minutes with Valoren
The return this attaches to

This is one schedule. It attaches to the IHT400 — the main Inheritance Tax account — which is where every schedule you complete comes together.

Next: IHT400
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