How to complete IHT419: deducting the deceased's debts from the estate for Inheritance Tax
The estate's IHT is calculated on the net estate after deducting what the deceased owed.
IHT419 is where those deductions are declared: credit card balances, unsecured loans, overdrafts, outstanding utility bills at death, and (separately) funeral costs.
Mortgage debts secured on property are already deducted on IHT405.
This walkthrough covers what is and is not deductible, how to handle a debt that was being disputed, what counts as 'reasonable' funeral expenses, and the post-2013 restrictions that limit deduction of certain artificially created debts.
✓ Official source checked 2 September 2026 · GOV.UK last revised this form 8 May 2018IHT419 on GOV.UK ↗
United Kingdom·Informational, not legal or financial advice·Official source: GOV.UK
✓Official form · always current
This is the same official IHT419 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on GOV.UK — the link below fetches the current version live from GOV.UK the moment you click it, so it can never go out of date.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: May 2018 · confirmed on GOV.UK 2 September 2026
This walkthrough takes IHT419 field by field, in plain English. Most of the form is a list of what the deceased owed; the hard part is knowing which debts actually reduce the taxable estate, whether a funeral cost counts as 'reasonable', and which debts the post-2013 rules disallow.
The deduction HMRC most often disallows
Including informal or artificial debts to family members as deductions.
Post-2013, HMRC scrutinises intra-family debts very carefully.
If the deceased borrowed money from a family member and the lender did not actually need the money back, the transaction may be re-characterised as a gift rather than a genuine loan, making it non-deductible.
For a debt to be deductible, it must have been incurred for full consideration — the deceased must have received something of equivalent value in exchange for taking on the debt.
The form, in summary
The IHT419 form, in summary.
Valoren
IHT419·4 pages·24 fields guided
With Valoren25 minutes
Without Valoren1–2 hours
gathering statements from creditors at the date of death
IHT419 allows the estate to deduct from its gross value debts that the deceased owed at the date of death.
The principle is that IHT should be charged on the net estate — what remains after paying what the deceased owed.
However, there are important restrictions: debts created by borrowing money to buy excluded property (foreign assets), debts on which interest has been manipulated through avoidance schemes, and debts that were not incurred for full consideration may all be restricted or disallowed.
Funeral expenses (reasonable costs only) are also deductible on IHT419 even though they are technically not a debt of the deceased — they are a liability of the estate.
·Who Files — The executor or administrator, as part of the IHT400 account
·4 pages · 24 fields guided
·Draws from your Estate File — Financial Accounts, Income & Outgoings, Funeral & Committal Wishes
Section01
§11
Section 1
What debts are deductible — the core rules
A debt is deductible from the estate if: it was incurred for full consideration (the deceased received something in return); it was enforceable against the estate at the date of death; and it was not created for the purpose of reducing IHT artificially.
01
Unsecured loans and credit cards
Credit card balances, personal loans, overdrafts, and other unsecured debts outstanding at the date of death are fully deductible.
Request a statement of account as at the date of death from each creditor.
Include the principal balance and any interest that had accrued but not yet been charged to the account.
02
Utility bills and regular outgoings
Household bills that were outstanding at the date of death (gas, electricity, water, council tax, telephone) are deductible.
For bills billed in arrears (most utilities), there will be a period of use up to the date of death for which no bill had yet been issued — the deceased owed this as an accrued liability even if no invoice had been received.
03
Outstanding income tax and other HMRC liabilities
Any income tax, National Insurance, capital gains tax, or VAT that was outstanding at the date of death is a debt of the estate.
This typically arises from the deceased's most recent Self Assessment return, an open enquiry, or a PAYE underpayment.
HMRC bereavement team can confirm the amount outstanding.
If the deceased was self-employed, there may also be Class 2 or Class 4 NIC outstanding.
04
Care home fees
If the deceased was in a care home and fees for the last period had not yet been paid, those outstanding fees are a deductible debt.
The care home will provide a final invoice or statement of outstanding amount.
05
What is NOT deductible
Contingent liabilities (debts that might arise in future, for example a potential claim against the deceased that has not yet been made formal); debts to family members not incurred for full consideration; debts that are statute-barred (past the limitation period); and certain anti-avoidance restricted debts under the post-2013 rules (see Section 3).
HM Revenue & Customs (HMRC) · IHT419❦
Section02
§22
Section 2
Funeral expenses — what is and is not deductible
Reasonable funeral expenses are deductible from the estate on IHT419, even though they arise after death.
HMRC's standard is 'reasonable' — there is no cap, but extravagant expenses beyond what is commensurate with the estate's value may be challenged.
01
What counts as funeral expenses
Funeral director's charges (collection, preparation, coffin, hearse, service); burial or cremation fees (cemetery or crematorium charges); minister's or officiant's fees; flowers for the service; order of service printing; funeral wake or reception (reasonable refreshments); headstone or grave marker (may be claimed in a later period — HMRC accepts this even if paid after the IHT400 is submitted); transport costs for close family to attend.
02
What is not deductible as funeral expenses
Costs of a will-reading, 'death notice' in a newspaper (considered promotional), legal costs of administering the estate, the cost of commemorative items for family members, or any costs that are really a bequest to someone.
03
Funeral pre-payment plans
If the deceased had a pre-paid funeral plan, the funeral costs are met by the plan and are not an additional debt of the estate.
However, the plan itself — if the deceased paid into it — is an asset of the estate (its value at the date of death).
The net IHT position is roughly neutral: the pre-payment was an asset while the person was alive, and the funeral costs are met by the plan on death.
Reasonable funeral expenses are deductible from the estate on IHT419, even though they arise after death.
HM Revenue & Customs (HMRC) · IHT419❦
Section03
§33
Section 3
The post-2013 restrictions — when debts are not deductible
Finance Act 2013 introduced rules (now in IHTA 1984 ss.162A–162C) that restrict the deductibility of certain debts created as part of IHT planning.
These rules are targeted at artificial arrangements, not genuine commercial borrowing.
01
Loans used to buy excluded property
If the deceased borrowed money specifically to buy excluded property (typically foreign assets or certain non-UK sited investments that are themselves outside IHT), the debt is not deductible.
The excluded property is outside the IHT estate; the debt used to acquire it cannot reduce the IHT estate.
This prevents a planning structure where UK-taxable assets are mortgaged to buy overseas assets.
02
Artificially created intra-family debts
HMRC may challenge a debt to a family member where: there is no written loan agreement; no interest was charged or paid; there was no genuine expectation of repayment; and the 'debt' was created specifically to reduce the estate's IHT value.
These are scrutinised closely, particularly where large sums are involved and the 'lender' did not need the money back.
03
Genuine family borrowing is deductible
A genuine loan from a family member (made on commercial terms with a written agreement, regular interest payments, and a realistic repayment schedule) is deductible.
The test is substance over form: did the economic reality match the legal form of the transaction?
Finance Act 2013 introduced rules (now in IHTA 1984 ss.162A–162C) that restrict the deductibility of certain debts created as part of IHT planning.
HM Revenue & Customs (HMRC) · IHT419❦
Many people file IHT419 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
IHT419 questions, answered.
IHT419 is the schedule to the IHT400 account where the executor lists the debts the deceased owed at the date of death — credit card balances, unsecured loans, overdrafts, outstanding utility and council-tax bills, unpaid care-home fees, and any income tax or other HMRC arrears — together with reasonable funeral expenses.
These deductions reduce the gross estate so that Inheritance Tax is charged on the net estate: what remains after paying what the deceased owed.
The executor named in the will, or the administrator where there is no will, completes IHT419 as part of the IHT400 account.
It is not a standalone form — it is one of the schedules that accompanies IHT400 to HMRC.
IHT419 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 owed is due earlier, by the end of the sixth month.
The same deadline applies to the schedule, because it is submitted as part of that account rather than separately.
No. IHT419 is a free schedule to the IHT400 account — there is no separate filing fee.
Any Inheritance Tax owed on the estate is calculated through IHT400 itself; IHT419 only records the deductions that reduce the amount on which that tax is charged.
You need a statement of account from each creditor showing the balance as at the date of death (credit cards, loans, overdrafts), the outstanding utility, council-tax and care-home bills, written confirmation from HMRC of any income tax, National Insurance or other arrears, the funeral director's invoice for the reasonable funeral costs, and — if one existed — the details of any pre-paid funeral plan.
Mortgages and other debts secured on property are not entered here; they are deducted on IHT405.
Claiming an informal or artificially created debt to a family member.
Since the post-2013 rules, HMRC looks closely at intra-family loans: a debt is only deductible if it was incurred for full consideration — the deceased received something of equivalent value in return — and is genuinely enforceable against the estate.
A 'loan' with no written agreement, no interest and no real expectation of repayment may be treated as a gift and disallowed.
Where excluded-property loans, avoidance-scheme interest, or a contested family debt are involved, check HMRC's guidance (IHTM28000 onward) and consider professional advice before claiming the deduction.
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Where this fits
IHT419 is one form. The file behind it is the rest.
Forms are easier when the records are ready.
For IHT419, that means a statement of account from each creditor as at the date of death, the outstanding utility, council-tax and care-home bills, written confirmation of any income tax or other HMRC arrears, the funeral director's invoice, and the details of any pre-paid funeral plan.
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·No separate fee·25 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.
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