When is Inheritance Tax Paid after a death?
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When is Inheritance Tax paid after a death?
When is Inheritance Tax paid – IHT must be paid (normally) before the grant of probate is issued. In other words, IHT has to be paid before you have access to the inheritance money!
If there is property involved HMRC will accept staged payments of Inheritance Tax (until the property is sold) at least on the property.
Banks etc will often release money direct to HMRC when Inheritance Tax paid, but failing that you do have to borrow it unless HMRC will accept your undertaking to pay ASAP plus interest.
Any farming or business assets may be fully or partially exempt, and indeed there are many other exemptions and traps.
Delay is fatal because they will start charging penalties and interest on the amount of Inheritance tax which should have been paid.
Extracts from the book:
21. Inheritance Tax paid by instalments (normally on property)
if you qualify, go for it but make sure the funds are guaranteed, as the Executor remains liable until the tax is paid in full! Repayable over 10 years or until the property is sold is a big benefit – but the revenue has increased the interest rate that to 2.6%. If you overpay, you won’t get more than 0.5% on the money you have inadvertently lent to HMRC!
Deadline for paying Inheritance Tax
In most cases, you must pay Inheritance Tax within six months of the end of the month in which the deceased died. After this, interest and penalties will be charged on the amount outstanding.
You can pay in yearly instalments over ten years if the value of the estate is tied up in property such as a house.
The due dates are different if you’re paying Inheritance Tax on a trust.
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