April 2026 brought with it further changes to the Inheritance Tax (IHT) regime, and with those changes came another layer of compliance. HMRC has now introduced Form IHT437, a new schedule to sit alongside the IHT400, and one that will be particularly relevant to estates involving agricultural or business assets. While commentary on the recent reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) has been widespread, the practical implications of the new form are only just starting to filter through to those dealing with estate administration in practice.
Why has IHT437 been introduced?
Historically, APR and BPR operated largely as percentage‑based reliefs, generally applying at 100% or 50% depending on the circumstances; and in many spousal and civil partner estates the available relief could pass across without any need for detailed calculation or formal claim.
That position has now changed.
From 6 April 2026, APR and BPR are subject to a combined £2.5 million allowance at the 100% rate, with any excess qualifying only for 50% relief (where the asset would have otherwise qualified for 100% relief). As a result, HMRC now requires greater transparency around:
- how much relief was available on the first death,
- how much was actually used, and
- how much (if any) remains available for transfer to the surviving spouse’s estate.
Form IHT437 has been introduced to support that process.
What is Form IHT437?
IHT437 is a supplementary schedule to the IHT400 and is used to claim the transfer of any unused 100% APR/BPR allowance from a pre‑deceased spouse or civil partner to the estate of the person who has died more recently.
It is important to note that this is not a standalone form. It must be submitted as part of a full IHT400 account, alongside the relevant APR and BPR schedules, where applicable.
When will IHT437 be required?
IHT437 will be relevant where:
- the deceased’s estate includes assets which may qualify for APR or BPR, and
- a spouse or civil partner died before them, and
- not all the available relief allowance was used on the first death.
The level of information required on the form will depend on when the first spouse died.
First death before 6 April 2026
Where the first spouse or civil partner died before 6 April 2026, the position is relatively straightforward. As the new capped allowance did not apply at the time of that earlier death, the full 100% relief allowance is treated as unused and transferable.
In these cases, the form is largely confirmatory and does not require a detailed breakdown of assets or relief claimed on the first death.
First death on or after 6 April 2026
Where the first spouse died on or after 6 April 2026, the position is more complex. Executors will need to provide supporting information from the earlier estate so HMRC can assess how much of the £2.5 million allowance was used and how much remains available.
This may include:
- details from the grant of representation,
- a copy of the will and any codicils,
- information regarding any deeds of variation, and
- details of lifetime gifts involving agricultural or business property.
HMRC has made it clear that this information is required to properly quantify the transferable allowance.
A shift away from unlimited reliefs
The introduction of IHT437 highlights that APR and BPR are no longer unlimited relief, and that the valuation of relievable assets will play a greater role in the administration of an estate.
In recent years, we have seen a greater number of queries raised by HMRC about reliefs claimed and the values used. HMRC is likely to increase its scrutiny of IHT400s following the reforms to APR and BPR, leading to:
- more discussions about the availability of relief,
- more referrals to the District Valuer and negotiations with Agents; and
- ultimately, delays in the administration of estates across the board.
Practical points for executors and advisers
For those administering estates, there are several key takeaways:
- Identify early whether IHT437 may be required, particularly where there is a spousal dimension and agricultural or business assets are involved.
- Establish the date of the first spouse’s death, as this will determine the level of detail required.
- Ensure that records from the earlier estate are obtained where necessary, as these may be critical to supporting the claim.
- Do not assume that relief will transfer automatically, even where all assets passed to the surviving spouse on the first death.
Where can further guidance be found?
HMRC has updated its Inheritance Tax Manual to reflect the introduction of IHT437, with detailed guidance set out in IHTM25533 to IHTM25536. These sections are essential reading for anyone advising on or administering estates involving APR or BPR and spousal transfers.
The addition of Form IHT437 may feel like yet another administrative burden in an already complex IHT landscape. However, it serves as a clear reminder that, when claiming APR and/or BPR, HMRC are likely to raise enquiries about those claims and any claims for brought forward allowance. Practitioners and clients need to be prepared for those challenges and the resulting delays in the administration of the estate.
For estates containing agricultural or business assets, early advice and careful planning will be key to ensuring that valuable reliefs are not delayed, or lost altogether.