How to claim the 36% reduced rate of Inheritance Tax using IHT430
Leave at least 10% of the net estate to charity and the IHT rate on the rest drops from 40% to 36%. The mechanics are less friendly than the headline: the estate is split into components, the 10% test is applied to a 'baseline amount' that has its own definition, and estates near the threshold face a cliff edge where a few hundred pounds of extra charitable giving can change the tax on everything.
IHT430 is also where elections are made to merge components — or to opt out of the reduced rate where claiming it would actually cost money. This walkthrough covers the test, the components, the elections, and the near-threshold arithmetic every executor should run before filing.
✓ Official source checked 23 August 2026 · GOV.UK last revised this form 10 September 2024IHT430 on GOV.UK ↗
United Kingdom·Informational, not legal or financial advice·Official source: GOV.UK
✓Official form · always current
This is the same official IHT430 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on GOV.UK — the link below fetches the current version live from GOV.UK the moment you click it, so it can never go out of date.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: September 2024 · confirmed on GOV.UK 23 August 2026
This walkthrough takes IHT430 field by field, in plain English. The 36% rate sounds like a simple 10%-of-everything test; the hard part is the statutory 'baseline amount' per component, the cliff edge just under 10%, and the deed-of-variation fix most estates never run the numbers on.
The thing most people get wrong
The 10% cliff edge. At 9.9% of baseline the estate gets nothing — the whole component stays at 40%.
Near the threshold the arithmetic flips intuition: increasing the charitable gift to reach exactly 10% can leave the other beneficiaries better off after tax than the smaller gift did, because the entire component's rate falls to 36%.
Executors and beneficiaries can fix a near-miss with a deed of variation within two years of death topping the charity gift up to the threshold — a small, legitimate adjustment that regularly pays for itself several times over. Do the marginal calculation before dismissing it.
The form, in summary
Valoren
IHT430·4 pages·62 fields guided
With Valoren45 minutes
Without Valoren2–3 hours
the arithmetic is mechanical once the components are identified; identifying the components correctly is the real work
Deadline
2 yearselection window for elections — file with IHT400
Where at least 10% of the baseline amount of an estate component passes to qualifying charities, the IHT rate on that component drops from 40% to 36%.
The baseline is not the whole estate: the estate is split into up to three components — general (solely-owned and tenants-in-common assets), survivorship (joint assets passing automatically), and settled property — with gifts-with-reservation treated separately, and the 10% test applies to each component on its own unless components are merged by election.
The baseline amount is the component's chargeable value after liabilities, exemptions and the available nil-rate band, but adding back the charitable legacy itself.
Elections (to merge components so one large charitable gift can carry others to 36%, or to opt out of the reduced rate) must reach HMRC within 2 years of the date of death.
·Who Files — The executor or administrator — with the signatures of those liable for the tax on each component included in an election
·4 pages · 62 fields guided
·Draws from your Estate File — Succession Plan, Legal Instruments, Civil Dossier
Section01
§11
Section 1
The 36% rate and the baseline test
The reduced rate rewards estates that give a tenth — but a tenth of a statutorily-defined baseline, per component, not a tenth of the estate as a lay reader would compute it.
01
The baseline amount
For each component: chargeable value, less liabilities and exemptions, less the component's share of the available nil-rate band — then ADD BACK the charitable gift itself.
The add-back trips people up in both directions: it makes the target bigger than the naive calculation, but it also means the gift itself helps meet the test it is measured against.
02
Passing the test
Charitable gifts qualifying for the s.23 charity exemption count towards the 10%.
If the total reaches 10% of the component's baseline, everything chargeable in that component is taxed at 36%.
If it reaches 9.99%, nothing is — there is no partial credit.
03
What the saving is worth
Four percentage points on the whole chargeable component.
On a £600,000 chargeable component the reduced rate saves £24,000 — which is why topping a charitable gift up to the threshold by deed of variation is so often worth modelling.
The reduced rate rewards estates that give a tenth — but a tenth of a statutorily-defined baseline, per component, not a tenth of the estate as a lay reader would compute it.
HM Revenue & Customs (HMRC) · IHT430❦
Section02
§22
Section 2
Components — and the merger election
The estate is not one pot for this relief. IHT430's structure follows the components, and so must the claim.
01
The three components (plus GWR)
General: solely-owned assets and tenants-in-common shares — where will gifts to charity live.
Survivorship: joint assets passing automatically. Settled property: trusts aggregating with the estate.
Gifts with reservation sit outside the three but appear on the form with their own columns.
Most simple estates are general-component-only, and the schedule collapses to one calculation.
02
Merging components
An election can merge components with the component receiving the charity money, so one gift can carry the merged whole to 36%.
Everyone liable for tax on a merged component must join the election — a surviving joint owner whose inheritance suddenly bears differently-computed tax has to agree.
The election is a real decision with real signatures, not a checkbox.
03
Opting out
Any component can elect out of the reduced rate.
Rarely used, but correct where the compliance cost of the claim exceeds the 4-point saving on a small component.
The estate is not one pot for this relief. IHT430's structure follows the components, and so must the claim.
HM Revenue & Customs (HMRC) · IHT430❦
Section03
§33
Section 3
Qualifying charities — and the 2023 boundary change
The definition of a qualifying charity narrowed materially in 2023. Older wills with European charitable gifts need checking, not assuming.
01
The current definition
Charities within the jurisdiction of the High Court of England & Wales/Northern Ireland or the Court of Session in Scotland, meeting the FA 2010 Sch.6 conditions (charitable purposes, management condition), plus registered Community Amateur Sports Clubs.
Following the Spring Budget 2023 announcement, EU/EEA charities lost recognition from 15 March 2023, with a transitional period to 1 April 2024 for those HMRC had previously accepted — so a death after 1 April 2024 tests strictly against the UK-only definition.
02
Wills drafted before the change
A will leaving money to a European charity, drafted before 2023, may now produce a gift that neither gets the s.23 exemption nor counts toward the 10% — a double loss the testator never intended.
Executors finding such a gift should take advice on the construction of the clause and on whether a variation can redirect it to a qualifying charity.
03
Evidence
For each charity: name, registration number (or equivalent evidence of qualifying status), and the amount or share passing.
HMRC checks the register; get the details from the charity's own registration record, not from a letterhead.
The definition of a qualifying charity narrowed materially in 2023. Older wills with European charitable gifts need checking, not assuming.
HM Revenue & Customs (HMRC) · IHT430❦
Section04
§44
Section 4
The cliff edge — and the deed-of-variation fix
Near the threshold, small numbers move large ones. Run the marginal arithmetic before filing — and before dismissing a top-up as generosity the residuary beneficiaries won't wear.
01
The near-miss estate
Where the charitable gift lands between roughly 9% and 10% of baseline, compute both worlds: the estate at 40% as drafted, and the estate at 36% with the gift topped up to exactly 10%.
In a band around the threshold the top-up costs less than the tax it saves — the residuary beneficiaries receive MORE by giving more. Outside that band, it doesn't.
The calculation takes minutes and is worth doing in every estate with any charitable gift.
02
The two-year variation window
A deed of variation within two years of death (IHTA 1984 s.142) can increase the charitable gift with effect for IHT as if the will had said so.
Paired with Schedule 1A, this is the standard rescue for a near-miss — but it needs the consenting signatures of the beneficiaries giving up value, and the charity's gift must genuinely take effect.
03
Get the timing right
The IHT430 merge/opt-out elections and a s.142 deed of variation each run on their own 2-year clock from the date of death, and both need to be diarised from day one — these are the deadlines that quietly expire while valuations are being argued.
Near the threshold, small numbers move large ones. Run the marginal arithmetic before filing — and before dismissing a top-up as generosity the residuary beneficiaries won't wear.
HM Revenue & Customs (HMRC) · IHT430❦
Many people file IHT430 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
IHT430 questions, answered.
Per component: take the component's chargeable value, deduct liabilities, exemptions and the component's share of the available nil-rate band, then add the charitable legacy back in — that is the baseline amount.
If the charitable gift is at least 10% of that baseline, the whole component is taxed at 36% instead of 40%.
It is emphatically not '10% of everything the deceased owned' — a will drafted to leave '10% of my estate' can still fail the statutory test, which is why modern charity clauses reference the Schedule 1A definition directly.
General (solely-owned assets and tenancy-in-common shares), survivorship (joint assets passing automatically to a co-owner), and settled property (trust assets aggregating with the estate) — with gift-with-reservation property handled separately.
The 10% test runs per component, so a charitable gift made from the free estate does nothing for the tax on a joint-property component — unless a merger election combines them so the single gift can satisfy the test across the merged whole.
Because claiming it is not always worth the administration: where the charitable gift only just qualifies a very small component, the 4-point saving can be less than the professional cost of running the election and the more detailed computations.
The opt-out election exists for exactly this — and the decision belongs to the people bearing the tax on that component, whose signatures the election needs.
Charities within the definition in Finance Act 2010 Schedule 6 — which means charities subject to the jurisdiction of the High Court of England & Wales or Northern Ireland, or the Court of Session in Scotland (UK-registered charities and their equivalents).
EU and EEA charities lost recognition for UK charitable tax reliefs following the Spring Budget 2023 announcement, effective from 15 March 2023, with a transitional period to 1 April 2024 for EU/EEA charities HMRC had previously accepted.
Registered Community Amateur Sports Clubs also count.
A foreign charity with no UK establishment generally does not qualify today — check before the will's gift is assumed to.
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Where this fits
IHT430 is one form. The file behind it is the rest.
The claim needs the will's charitable gifts, the estate's ownership structure (sole, joint, trust — the components), and the values, all in one place.
The Succession Plan's distribution overview and the Legal Instruments record carry exactly that structure.
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)·62 fields·No separate fee — supplementary schedule filed with IHT400·45 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.