IHT416 is the Inheritance Tax schedule for any loan the person who died had made that was still outstanding when they died: a loan to a relative, an IOU, a promissory note, a loan to trustees of a life policy, or a director's loan account. You use a separate IHT416 for each debt, and the outstanding capital plus interest is copied to box 73 of form IHT400.
This guide follows Schedule IHT416, the HMRC IHT400 Notes and HMRC's Inheritance Tax Manual, as of October 2026.
Which debts belong on IHT416
The IHT400 Notes list the sums that go in box 73 and need an IHT416 behind them:
- Sums the deceased lent personally to someone that hadn't been repaid at the date of death.
- Sums lent to trustees linked to a life assurance policy held in trust.
- Debts for which the deceased held a promissory note or an IOU.
- Amounts owed to the deceased from a director's loan account or a current account with a company.
- Loans the deceased made that were secured by a mortgage, with one IHT416 for each mortgage.
The starting rule: assume it will be repaid in full
This is the part families find hardest. The form says that if the deceased was owed something when they died, you must assume the debt will be repaid in full, and include the whole capital and interest outstanding at the date of death. It doesn't matter that the borrower is a son or daughter who was never really expected to pay it back. The loan is an asset of the estate at its full value unless repayment was impossible or not reasonably possible.
When you can put in a lower figure
If it's impossible, or not reasonably possible, for the debt to be repaid, you may include a reduced figure on IHT400. You then use box 9 of IHT416 to explain why. HMRC's manual says any reduced figure must come with an explanation, a calculation showing how you reached it, and some form of evidence. A borrower's bankruptcy papers or proof that they have no means to repay are the kind of evidence that makes the case.
The nine boxes
| Box | What it asks for |
|---|---|
| 1 | Date the original loan was made |
| 2 | Original value of the loan |
| 3 | Capital and interest outstanding at the date of death, totalled and copied to IHT400 box 73 |
| 4 | Whether the loan was secured by mortgage |
| 5 | Names of the borrowers and their relationship to the deceased |
| 6 | Interest charged, the rate or rates, and the period |
| 7 | Capital repayments made |
| 8 | Evidence that the loan exists, such as a letter or mortgage deed |
| 9 | Why you're using a figure different from box 3, with evidence and workings |
If the amount owed was a director's loan account or a current account with a company or business, the form says to answer box 3 and box 9 only.
No paperwork? Say so in box 8
Box 8 asks for copies of written evidence, such as a letter or a mortgage deed. HMRC's manual covers the common family case where nothing was written down: the box should then give brief details of the terms of the loan, how long it ran and whether it was repayable on demand. Don't leave it blank. A short, honest description is far better than silence, and it's what an officer will look for first.
Insurance-linked loan schemes
Some insurance products include a loan from the deceased to the trustees of a settlement or policy. If the trustees are to repay the loan, the form asks for a copy of the loan agreement and the settlement or policy document. These loans are easy to miss because the family may only know about the policy, not the loan inside it.
Step by step
- List every loan the deceased made: family loans, IOUs, notes, company loan accounts and loans to policy trustees.
- Fill in a separate IHT416 for each one.
- Work out capital and interest outstanding at the date of death for box 3.
- Attach evidence, or describe the terms in box 8 if nothing is in writing.
- If repayment isn't realistic, explain and evidence the reduced figure in box 9.
- Add up the box 3 figures and enter the total in box 73 of form IHT400.
If part of a loan was forgiven during the deceased's lifetime, that release may be a gift rather than a debt, so look at IHT403, gifts and other transfers of value for that part.
Mistakes to avoid
- Leaving out a family loan because nobody expected it to be repaid.
- Reporting the original loan amount instead of what was outstanding, with interest, at the date of death.
- Putting several loans on one form.
- Reducing the figure without the explanation, calculation and evidence box 9 asks for.
The verdict
IHT416 asks one hard question: what was the estate really owed? The default answer is everything, with interest, and the burden is on you to show why less will come back. Gather the loan paperwork early, describe informal family loans plainly, and only reduce a figure when you can prove the borrower can't pay. HMRC's Inheritance Tax helpline is 0300 123 1072, or +44 300 123 1072 if you're calling from outside the UK.
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Assets held overseas are reported on a different form, covered in the foreign assets form guide.
Related: the loans page.
Frequently asked questions
What is IHT416 used for?
It reports each debt owed to the deceased at the date of death, such as personal loans, IOUs, promissory notes and director's loan accounts.
Do I need a separate IHT416 for each loan?
Yes. HMRC asks for a separate form for each debt owed to the estate.
Where does the IHT416 figure go on IHT400?
The total of capital and interest outstanding at the date of death is copied to box 73 of form IHT400.
Can I value a family loan at less than the amount owed?
Only if it's impossible or not reasonably possible for it to be repaid, and you explain and evidence the reduced figure in box 9.
What if there's no written loan agreement?
Give brief details of the terms, the period of the loan and whether it was repayable on demand in box 8.
What about a director's loan account?
If the sum owed was a director's loan account or a current account with a company, answer box 3 and box 9 only.
