IHT38 claims Inheritance Tax relief when a house, building or land in an estate is sold for less than the value it had at the date of death. The relief replaces the death value with the lower sale price, so less tax is due. Sales generally need to happen within 3 years of the death, though sales at a loss in the fourth year can also count, and the claim must be made by the people liable for the tax.
This guide follows the IHT38 form (HMRC 05/26), the GOV.UK page for it (updated 1 October 2026) and HMRC's Inheritance Tax Manual, as of October 2026.
Who can claim
Only the appropriate person. That's whoever's liable for the Inheritance Tax on the land, for example the executors, administrators, trustees or the person who received a gift. If more than one group is liable, it's those paying the tax. Every appropriate person signs, and HMRC won't accept a claim signed by an agent. There's also a basic condition: if no Inheritance Tax was due when the account was delivered, there's no appropriate person and no relief.
The time limits
| Rule | What the form says |
|---|---|
| Qualifying sales | Made within the 3-year period beginning on the date of death |
| Fourth-year sales | Sales at a loss within 4 years after the death are treated as made within the 3-year period |
| Deadline for the claim | Within 4 years after the end of that 3-year period |
| Provisional relief | Can be claimed within 4 months of the last qualifying sale, unless you plan to buy an interest in land in those 4 months |
| Date of sale | Usually exchange of contracts, or in Scotland when the offer and qualified acceptance are agreed in writing |
The small-difference rule
You can't claim relief on a sale where the price differs from the value at death by less than £1,000 or 5% of the value at death, whichever is lower. HMRC's manual says it won't ask for an IHT38 where the difference is small enough that no relief would be available.
It's all or nothing across every sale
This is the trap. Box 1 asks for every interest in land the appropriate persons sold within 4 years of the death, whether it went for more or less than its value at death. Gains on some sales reduce the relief on others. That's why HMRC advises not claiming until everything to be sold has been sold, and warns that you can't withdraw a claim if it turns out to be disadvantageous.
Joint property is a second trap. Any discount taken for joint ownership at death, which can be a starting point of 10% in England under the IHT404 rules, doesn't apply to your share of the sale proceeds. Claiming can then increase the value, and the tax.
What reduces or blocks relief
- Sales to a beneficiary or a beneficiary's relative may not qualify, and a profit on such a sale may cut relief elsewhere.
- Buying land between the death and 4 months after the last qualifying sale can restrict relief.
- Leases with less than 50 years to run at death have special rules.
- If the land has already been distributed out of the estate, relief may not be available.
- Yes answers on questions 2 to 9 of the form, such as accepting less than the best price or changes to the land since death, may restrict or remove relief.
Compensation, insurance and buy-back rights
The later questions on the form dig into anything else that changed the value. Question 7 asks whether statutory compensation has become payable to anyone since the death for an interest in the land, question 8 whether the sellers or their relatives have a right to buy back any of it, and question 9 whether anything's been received under an insurance claim. Each yes answer needs details, and each can restrict the relief.
Working out the figures
Relief is based on the gross sale price, restricted by the net price of any purchase. Don't deduct sale or purchase expenses such as commission, stamp duty or legal fees. The gross price is usually the agreed price in the contract. HMRC asks for a full completion statement for every property to speed things up, and repays any overpaid tax by Faster Payments to the bank account you give.
Need a clearance certificate afterwards? See getting an Inheritance Tax clearance certificate.
Filling in the form
- Wait until all intended sales are complete, unless you're claiming provisionally.
- List every land sale in the 4 years, with value at death, sale date, gross proceeds and each buyer's name.
- Answer questions 2 to 9, explaining any yes answer.
- Choose declaration 1 (no further sales or purchases) or 2 (relief will be provisional and you'll report later changes).
- Have every appropriate person sign, and send it to Inheritance Tax, HM Revenue and Customs, BX9 1HT.
If you report a lower sale price to HMRC without claiming, its manual says it may send you an IHT38 anyway, and for unrepresented executors it should point out the relief and the risk of a disadvantageous claim. The original values sit on the IHT400 and its land schedule.
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The verdict
IHT38 can return real tax when a property market falls after a death, but it's a one-way door. Add up every land sale within 4 years, check the £1,000 or 5% rule, watch joint property and sales to family, and only claim once you're sure the overall result is in the estate's favour.
The residence allowance claim is walked through in claiming the residence nil rate band.
Frequently asked questions
What is IHT38?
It's the HMRC form used to claim Inheritance Tax relief when land or buildings from an estate are sold for less than their value at death.
How long can the estate take to sell and still get IHT38 relief?
Sales generally need to be within 3 years of the death, but sales at a loss within 4 years are treated as made in that period.
Is there a minimum loss for IHT38?
Yes. No relief is due if the sale price differs from the value at death by less than £1,000 or 5% of that value, whichever is lower.
Can I withdraw an IHT38 claim?
No. HMRC says you can't withdraw a claim if it proves to be disadvantageous.
Do I include sales that made a profit?
Yes. Box 1 asks for every land sale within 4 years of the death, whether for more or less than the value at death.
Can I deduct estate agent fees on IHT38?
No. Relief is based on the gross sale price, without deducting costs such as commission, stamp duty or legal fees.
