Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Inheritance Tax Manual

Liabilities: law relating to debts: general rules for deducting liabilities against property

In general, debts are deducted against the value of the assets in the deceased’s free estate that do not qualify for the instalment option. The main exceptions are where there are:

  • charges (IHTM28392) on any property, such as a mortgage on land, or security is fixed on moveable (personal) property, IHTA84/S162 (4)
  • business debts (IHTM28393), or
  • foreign debts (IHTM28394)

You should also take special care where there is excluded property (IHTM28395) or where there are UK debts and there is both foreign and UK property (IHTM28396) in the estate.

A liability at any title may only be deducted against the assets at that title. This has implications for carrying forward deficits (IHTM28397) in one part of the estate against another.