How to keep IHT records and avoid an unnecessary bill

Poor record keeping can mean your loved ones pay more Inheritance Tax (IHT) than necessary - and face a much more complicated administration process at an already difficult time. Keeping clear, organised records during your lifetime can make it significantly easier for your executors to calculate any tax due and ensure all available reliefs and exemptions are claimed.

This guide explains what to record, how to do it, and where people commonly go wrong.

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Why record keeping matters

There are several generous IHT exemptions, particularly around gifting, that can reduce the value of your estate, and the tax payable on it. However, these exemptions are not automatic. Your executors must be able to evidence what you did, when, and why.

If records are missing or unclear:

• HMRC may refuse certain exemptions
• Executors may need to make assumptions or estimates
• The estate could end up paying more tax than necessary

Good records reduce uncertainty and make it easier to defend claims if HMRC asks questions.

1. Keep a clear record of your assets and liabilities

Start by maintaining an up-to-date summary of your financial position, including:

• Property (with addresses and approximate values)
• Bank and savings accounts (including NS&I and Premium Bonds)
• Investments (shares, funds, bonds)
• Pensions
• Valuable personal possessions (e.g. jewellery, art, vehicles)
• Any debts (mortgages, loans, credit cards)

Make sure to include the names of which providers any accounts are held with.

You do not need precise valuations at all times, but keeping a clear list will make it much easier for your executors to establish the value of your estate at the date of death.

2. Keep a detailed log of gifts

Gifts are one of the most important areas for IHT, and one of the most commonly challenged by HMRC.

A practical approach is to use HMRC’s IHT403 form as a template. Although this form is completed after death, it shows exactly how HMRC expects gift information to be presented.

For each gift, record:

• Date of the gift
• Amount or value
• Recipient
• Nature of the gift (cash, asset, etc.)
• Which exemption (if any) you believe applies

Record exempt gifts too

Even if a gift is likely to be exempt, it is still good practice to record it. For example, the following are generally IHT-free:

• Up to £3,000 per tax year (using the annual exemption)
• Small gifts of up to £250 per person
• Gifts to a spouse or civil partner

While these are generally outside the scope of death taxes, noting them, along with the exemption used, helps to avoid confusion later.

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). There is a risk that the issuers of bonds may not be able to repay the money they have borrowed or make interest payments. When interest rates rise, bonds may fall in value. Rising interest rates may cause the value of your investment to fall. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.