Guidance

HMRC Trusts and Estates Newsletter: August 2026

Updated 13 August 2026

Welcome to the August 2026 edition of the HMRC Trusts and Estates Newsletter.

We do not have a mailing list for the newsletter.

Borderline excepted estates — supporting agents to get Inheritance Tax (IHT) reporting right

To support agents who may need to report Inheritance Tax, HMRC is issuing an educational One to Many letter under the Borderline Excepted Estates project.

This is a preventative and educational exercise, not a compliance investigation. The aim is to help agents and their clients get things right first time, reducing the need for downstream checks later, by providing clear and practical guidance.

Since changes to the excepted estate regulations in January 2022, more non-taxpaying estates have been able to apply for a grant of probate or confirmation as excepted estates without needing to first submit a full IHT account (IHT400).

However, HMRC has noticed common misunderstandings about eligibility and reporting for the various nil rate band (NRB) allowances. Most notably, agents should not take the residence nil rate band (RNRB) and any brought-forward (transferable) allowance into account when they consider if the estate is an excepted estate. The downsizing allowance or transferable allowance also do not apply automatically and need to be claimed in an IHT400.

By not sending an IHT400 when they should, estates may find later that incorrect calculations or out of time claims cause problems and they may face unexpected tax and penalties.

The educational letter is being sent to agents who have submitted excepted estate grant applications with estate values at or around the various NRB thresholds (£325,000, £500,000, £650,000, £825,000 and £1 million). Its purpose is to identify common errors and misunderstandings around each of the NRB allowances, so that agents can avoid these pitfalls and claim them correctly.

The guidance encourages agents to ensure that estate valuations and allowance claims are accurate and well supported at the point of deciding whether they should submit an IHT400. Where there is any uncertainty about eligibility or values, agents are reminded that submitting an IHT400 account may be the most appropriate route. Relevant GOV.UK guidance is also signposted to support agents in checking the rules.

Read more about excepted estates in chapter IHTM06000 of the Inheritance Tax manual.

Changes to Inheritance Tax and trusts helplines

HMRC has changed how enquiries about IHT and trusts are handled on our helplines.

From 9 April 2026, the IHT and trusts helplines began operating as separate services. This change is intended to make sure customers and agents are directed to the right specialist teams and receive a more efficient service.

This means:

• a new, dedicated helpline number for trusts has been introduced
• customers and agents with queries about Income Tax and Capital Gains Tax for trusts and the Trust Registration Service should now use the trusts helpline
• the existing IHT helpline number remains unchanged — customers and agents should continue to call this number for help with IHT on trusts

HMRC will continue to keep stakeholders informed and ensure guidance is kept up to date across GOV.UK and other channels.

Inheritance Tax — reforms to agricultural property relief and business property relief

From 6 April 2026, changes to agricultural property relief (APR) and business property relief (BPR) apply for IHT. These reforms affect the amount of relief available for qualifying agricultural and business property and may be relevant to personal representatives, trustees and agents dealing with estates or chargeable transfers.

This means:

• for deaths and chargeable lifetime transfers on or after 6 April 2026, relief at 100% is limited to £2.5 million of combined qualifying agricultural and business property, with any excess relieved at 50%
• if an individual made a gift of qualifying agricultural or business property on or after 30 October 2024 and dies within 7 years of the gift and after 6 April 2026, the £2.5 million allowance for 100% relief also applies when calculating the IHT due on that gift at death
• any unused part of the £2.5 million allowance is transferable between spouses and civil partners on death, increasing the potential combined allowance to up to £5 million
• the rate of APR and BPR for certain categories of unlisted shares (including those traded on a stock exchange such as the Alternative Investment Market (AIM)) has also reduced from 100% to 50% in all circumstances
• the option to pay IHT by 10 interest-free annual instalments has also been extended to cover all APR and BPR qualifying assets from 6 April 2026
• for trusts, the amount of maximum allowance depends on the category of trust and the trust charges arising

Customers, personal representatives, trustees and agents dealing with agricultural or business property should make sure they understand how these changes may affect the relief available and any IHT due.

Further guidance on relief allowances is available on GOV.UK and in chapter IHTM25500 of the Inheritance Tax manual.

Inheritance Tax — unused pension funds and death benefits

HMRC has published further information on forthcoming reforms to bring most unused pension funds and death benefits into scope of IHT from 6 April 2027. These changes will affect personal representatives, pension scheme administrators and beneficiaries.

On 11 May 2026, HMRC published a technical note which provides further detail on how the legislation will operate in practice.

It covers how notional pension property will be identified, valued and allocated to beneficiaries. It also explains who will be responsible for reporting and paying any IHT due, the use of withholding notices and the pensions direct payments scheme, and how the reforms interact with existing Income Tax rules on pension death benefits.

HMRC will continue to publish further detail on how the legislation will operate, including in a further technical note to be published this summer.

On 15 July 2026, HMRC laid The Registered Pension Schemes (Provision of Information) (Miscellaneous Amendments) Regulations. This followed a short technical consultation, which closed on 11 June 2026.

The draft regulations set out how pension providers and personal representatives will share information with each other, with pension beneficiaries and with HMRC in respect of the deceased’s pension assets.

Further details are available in the published technical note and the draft regulations.

Reducing scanning errors for postal items

HMRC’s post is scanned by a digital mail service that looks for keywords and customer identifiers to send it to the correct HMRC team. To make sure your post reaches the right team as quickly as possible, use the correct postcode and consider:

• placing any page containing the HMRC Crown logo at the front of your correspondence — this may mean you put the form before any accompanying letter
• including, where possible, key reference details for the trust or estate on the first page of your letter — for example, National Insurance number, Unique Taxpayer Reference or IHT reference

If these are not available, provide:

• full name including ‘Trust’ or ‘Deceased’ for estates
• date of birth
• date of death
• last known address

Providing this information helps the digital mail service identify the customer and send items to the correct area first time, which will go some way in reducing processing time.

Changes to the registration requirements for the Trust Registration Service

Following public consultation and an amendment of the money laundering regulations on 30 June 2026, HMRC has issued new guidance on the types of trust that need to be registered.

Registration of non-UK trusts that own UK land and property and non-UK trusts that acquired UK land or property before 6 October 2020, that was still owned on 30 June 2026, will now be required to register. All non-UK trusts that have acquired qualifying UK land or property now also fall within the trust data sharing process.

General exemption

A new general exemption from registration has been introduced for certain low value trusts. To qualify, a trust must meet a number of conditions, including:

• not owning UK land or property
• not holding more than £10,000 of assets during its lifetime
• not generating annual income exceeding £5,000
• and not holding more than £2,000 of appreciable assets (such as art, antiques or collectibles)

The exemption is limited to one trust per settlor, although exempt trusts are not included in the total trusts created by the settlor. Taxable trusts still need to be registered.

Two-year exemption from registration

Deeds of variation and property co-ownership trusts are exempt from registration for 2 years from the date of death, aligning the requirements with will trusts.

Scottish survivorship destination trusts

Scottish survivorship trusts are exempt from registration.

Repeal of the furnished holiday letting regime

Trustees, personal representatives and their agents should be aware that the furnished holiday letting regime has been repealed. As a result, income and gains from furnished holiday let properties are now taxed under the same rules as other property income and gains.

The change took effect from 1 April 2025 for Corporation Tax and Corporation Tax on Capital Gains, and from 6 April 2025 for Income Tax and Capital Gains Tax.

The change aligns the tax treatment of furnished holiday lettings with other property businesses, helping to simplify the tax system and ensure consistent treatment across all property income and gains, including those arising within trusts and estates.

Trustees and agents should review existing arrangements to understand how the repeal may affect the taxation of trust or estate property income and gains.

Further guidance on the rules is available in chapter PIM4160 of the property income manual .