Form IHT410: telling HMRC about life assurance and annuities

When do you need IHT410?

You only need it if you're completing a full IHT400, and question 37 on that form asks whether the person paid premiums on any life assurance, annuities or similar products payable to their estate, to another person or which continue after death. The form itself says to use it when the person was paying regular or lump sum premiums on:

• life assurance policies, or where an insurer pays money to the estate because of the death, whoever's life the policy was on

• unit-linked investment bonds that pay 101% of the value of the units to the estate

• investment or reinvestment plans that pay out to the estate on death

• policies and bonds payable to beneficiaries under a trust, which don't form part of the estate

• joint life policies on which the person was one of the lives assured and which carry on after the death

Annuities bought with pension money don't go on IHT410, because the form sends those to IHT409. If you're unsure which schedules the estate needs overall, our guide to which Inheritance Tax forms you need walks through each one.

What IHT410 asks, question by question

• Questions 1 and 2: sums insurers pay to the estate because of the death, with the insurer, policy number and amount including bonuses. In Scotland, list the policies on the C1 inventory and just put the total here. The total goes in box 2.

• Question 3: a jointly owned policy on the person's life that continues after death, which belongs on IHT404 rather than this form.

• Questions 4 and 5: a policy on someone else's life that the person could benefit from, with the insurer's value at the date of death and a copy of the policy. The value goes in box 5.

• Question 6: box 2 plus box 5, which is carried to IHT400 box 57.

• Questions 7 to 9: purchased life annuity payments that continue after death, the final guaranteed payment date, and the capital and income split of the annual amount. Box 8 is included in IHT400 box 76.

• Questions 10 and 11: a lump sum payable under a purchased life annuity on death. Box 11 is included in IHT400 box 76.

• Question 12: premiums paid in the 7 years before death on a policy for someone other than a spouse or civil partner, with the details given on IHT403.

• Question 13: whether an annuity was bought at any time alongside such a policy, in which case send a copy of the policy schedule.

• Question 14: a right to benefit from a trust policy on someone else's life, with the details given on IHT418.

Notice that annuity values go to box 76 of the IHT400, not box 57, which is easy to miss when you're copying totals across.

Policies held in trust and why they usually fall outside the estate

A policy written in trust belongs to the trustees rather than to the person who died, so the insurer pays the trustees and they pass the money to the beneficiaries without it going through the estate. MoneyHelper describes this as the payout sitting outside both probate and Inheritance Tax, which is why the trustees can usually claim with the death certificate and the trust deed without waiting for the grant.

The trust still leaves a paper trail on the IHT400, though. If the person paid premiums in the 7 years before death on a policy for anyone other than their spouse or civil partner, each premium was a gift, so you answer Yes at question 12 and list them on IHT403, where gift exemptions such as the £3,000 annual exemption and regular gifts out of income can be claimed. The IHT400 checklist also asks for a copy of the policy and the trust documents. A trust policy only comes back into the estate in less common situations, mainly where the person who died could benefit from it themselves, which is what question 14 and form IHT418 deal with.

Joint life policies and mortgage protection

A joint policy that carries on after the first death, such as a joint life second death policy, goes on IHT404 with the person's share valued, not on IHT410. HMRC's manual on joint policies explains that the outcome depends on how the policy was owned: a share held as tenants in common passes under the will, a share held as joint tenants passes to the survivor, and where each person had a separate contractual interest the first person's interest simply ends. Between spouses or civil partners the exemption usually means no tax either way.

Mortgage protection follows the property. If the home was in the person's sole name, the policy payout goes in question 2 and the mortgage is deducted separately in IHT400 box 80. If the home was jointly owned, the policy, property and mortgage all go on IHT404, and our guide to joint mortgages after a death covers the lender's side.

Annuities with guaranteed payments and policies on someone else's life

A purchased life annuity usually stops on death, but if it had a guarantee period that hadn't run out, the remaining payments are paid to the estate. You value that right with HMRC's guaranteed annuity calculator, using the payment dates and amounts from the insurer, and attach the calculation to the IHT400.

A policy the person owned on someone else's life, a spouse's for example, doesn't pay out on their death but is still an asset, so it needs a value at the date of death. HMRC's guidance on policy values points out that the open market value it wants can be higher than the surrender value, and that a term policy can have no surrender value but still be worth something, so ask the insurer specifically for a valuation for Inheritance Tax rather than a surrender quote.

How to get figures from insurers

Insurers will usually confirm figures before they release any money, which matters because the IHT400 has to be sent before you can apply for the grant. Write to each insurer with the death certificate and policy number and ask for the amount payable at the date of death including bonuses, whether the policy was written in trust (with a copy of the deed if so), and for annuities the guarantee end date, payment amounts and the capital and income split. Bank statements showing premiums are the fastest way to find policies the family didn't know about. Legacy Trail's free notification service can tell insurers and other private-sector companies about the death for you, although the valuation letter still has to come from each insurer.

Worked examples

These are illustrations, not real cases.

A policy paying into the estate. Joan had a £50,000 whole of life policy not written in trust, and the insurer confirms £53,400 including bonuses. That goes in question 2, carries to box 6 and then to IHT400 box 57.

A policy in trust. Raj paid £40 a month into a term policy written in trust for his children, which pays out £200,000 to the trustees. Question 1 is No, question 12 is Yes, and the premiums from the last 7 years go on IHT403, and at £480 a year they sit within the £3,000 annual exemption as long as he made no other gifts. The £200,000 isn't added to the estate.

A guaranteed annuity. Eileen bought a purchased life annuity with a 10-year guarantee and died after six years. The remaining four years of payments are valued with the calculator, entered at question 8 and included in IHT400 box 76.

Common mistakes

The most frequent error is putting a pension annuity on IHT410 when it belongs on IHT409, closely followed by using a surrender value for a policy on the person's own life, when what counts is the sum actually paid out. People also leave trust policies off entirely, forgetting that the premiums still need reporting on IHT403, and list joint policies here instead of on IHT404. Finally, copy annuity totals to box 76 rather than box 57, and if the estate exceeds the thresholds, check the effect on the 7-year gift rules.