When is Inheritance Tax paid or at least Due after a Death?

When is Inheritance Tax Paid after a death?

(Click for main page on Inheritance Tax)

How soon after death do you have to pay inheritance tax?

Inheritance Tax (IHT) must be paid by the end of the sixth month after the person’s death. If it is not paid within this timeframe, HMRC will start charging interest. So don’t hang about or it could be expensive – if you feel you need professional help, we can put you in touch with sensibly priced help.

Sounds simple, but bear in mind it may take you 3 weeks to get a reference number from HMRC so that you can pay.

You also have to have a firm grip on the value of the assets and of the total value of liabilities in the estate.  That can take a long time, and it is surprising how often you will be given incorrect figures by Institutions who should know better. Many of them will take weeks to reply, leaving you little time for questioning things you don’t understand in their replies.

How do I pay Inheritance Tax if there is no money in the Estate?

Many institutions will make direct payments to HMRC towards IHT bills before the Grant of Probate is issued.  You will have to fill in a form IHT423 for each bank that will be making payment and then send this to the banks at the same time as you send the full tax return (known as form IHT400) to HM Revenue & Customs. Of course, you need to have the IHT Reference Number before you can do that.

Where the problem is that most of the estate is in property which you can’t sell until probate is granted, HMRC will allow the inheritance tax to be paid in 6 monthly instalments over up to 10 years. You may have to arrange for a loan to pay the first one due 6 months after the month in which the death occurred, but fail to do so and they will charge interest and potentially penalties. As soon as the property is sold, the full IHT bill must be paid.

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.

When is Inheritance Tax paid?

Main Inheritance Tax Page.

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