When Do You Have to Pay Inheritance Tax?

As a rule, once a person dies you will have up to six (6) months to pay your Inheritance Tax bill.

So, for example, if a person died in December and the value of their estate was above the Inheritance Tax threshold, you would have until the 30th of June to pay the bill.

You would need to get a payment reference number. You cannot pay an Inheritance Tax bill without the unique number.

HM Revenue and Customs charge interest on payments made after the due date. They will use an Inheritance Tax interest calculator on a late payment.

Note: Different due dates and payment deadlines apply if you are making the payments on a trust (see below).

---

Paying from Your Own Bank Account

There are several ways to pay from your own bank account or from a joint account shared with the deceased person. In this case, you would be able to use:

• Online banking or telephone banking.
• CHAPS or Bacs.
• Your bank or building society.
• A cheque sent through the post.

You would be able to claim the money back once you have made the payment. But, you would need ‘probate‘ to claim the money from the estate of the deceased person or the beneficiaries (confirmation in Scotland).

---

Paying from an Account Owned by the Deceased

You can also pay from certain types of accounts owned by the deceased person. HMRC will accept payments from a deceased person’s NS&I account or from their government stock.

---

Paying Early (payments on account)

It is not necessary to know the exact amount of Inheritance Tax owed by someone’s estate to make a payment. HMRC call this type of early payment arrangement ‘payments on account’ (see below).

---

Checking HMRC Receipt of Payments

You do not get a receipt from HM Revenue and Customs for each separate payment that you make to them. HMRC will write to you after they receive all the Inheritance Tax and any interest owed.

There is a way to check if you pay the bill through your bank or building society account. The payment will show up on your statement which confirms that it left your account.

---

IHT Payment Reference Number Online

You cannot make a payment until you get a 15-digit Inheritance Tax reference number. You should get it from HM Revenue and Customs at least three (3) weeks before you pay (either):

• By an online reference request (unless it is for a trust).
• By post using ‘Inheritance Tax reference (IHT422)‘ (the return address is on the document).

Note: You must not use the online Inheritance Tax service 15-digit number to report the value of an estate.

---

CHAPS, Bacs Online or Telephone Banking

You can choose to pay by Faster Payments from your own account (or a joint account shared with the deceased). Online or telephone banking includes CHAPS or Bacs paid to the HMRC account.

Sort code: 08 32 10
Account number: 12001136
Account name: HMRC Inheritance Tax

As a rule, Faster Payments reach HMRC on the same or the next day (including bank holidays and weekends). A CHAPS payment should reach HMRC the same working day if paid within bank processing times. Bacs payments usually take three (3) working days.

Note: Use your Inheritance Tax payment reference number as the reference for the transaction. Check the bank transaction processing times and limits before making a payment.

---

Making Overseas Payments

You should use these details if you are transferring a payment from an overseas account to the United Kingdom.

Account number (IBAN): GB66BARC20114763495590
Bank identifier code (BIC): BARCGB22
Account name: HMRC Inheritance Tax

HM Revenue and Customs Banking Address

Barclays Bank PLC
1 Churchill Place
London E14 5HP
United Kingdom

---

Paying from Your Bank or Building Society

You can pay your Inheritance Tax bill from your own bank account. You can also use a joint bank account if you held one in joint names with the person who died. You would then be able to claim it back from the estate of the deceased person.

Use the payslip sent to you by HMRC if you are paying at a branch by cash or by cheque. Make a cheque payable to ‘HM Revenue and Customs only’.

If you pay by cheque, write the name of the deceased person and your 15-digit payment reference number on the back. The reference number will be on the payslip and letter sent to you by HMRC.

Note: Paying on a week day means HMRC will accept the payment on the date that you make it (not the date it reaches them).

---

Paying by Cheque (using postal methods)

Make a cheque payable to ‘HM Revenue and Customs only’ and allow three days for posting time. Write the name of the deceased person and your 15-digit payment reference number on the back.

The reference number will be on the payslip and letter sent to you by HMRC. Send the cheque and your payslip (unfolded) to:

HM Revenue and Customs
Cheque Banking Team
CAT 1, Room B1-25/26
St Mungo’s Rd
Cumbernauld G67 1YZ

If you are using the DX Secure delivery service you will be able to send it to HMRC DX address:

DX550100
Cumbernauld 2

---

Direct Payment Scheme

In some cases, you can pay your Inheritance Tax bill from the deceased person’s account using a ‘Direct Payment Scheme’. The bank or building society might pay it all, or part of it, to HMRC.

1. The first step is asking the bank or the building society to make you a ‘personal representative’. You can complete this part before applying for a grant of representation (probate) or confirmation in Scotland.
2. The next step is getting your Inheritance Tax payment reference number.
3. Fill in ‘Inheritance Tax form IHT423‘. Each bank or building society will need a form.
4. Send the following forms to HMRC with any supplementary pages or supporting documents:

• Inheritance Tax account (IHT400)
• Inheritance Tax: probate summary (IHT421)

Inheritance Tax
HM Revenue and Customs
BX9 1HT

You must wait for the bank or building society to make the payment. HM Revenue and Customs will then stamp and return Probate Summary form IHT421. That is how you will know that the Inheritance Tax got paid.

---

If You Use National Savings and Investments

You can ask NS&I to pay HMRC using money from the accounts or investments of the person who died. Both organisations would need certain documents if you want to pay an IHT bill this way.

Note: Paying Inheritance Tax by this method is not ideal if you will need to get probate quickly.

There is a special form to fill if an NS&I customer has died. You can also get the form by phone or by post from:

National Savings and Investments
Glasgow
G58 1SB
Telephone: 08085 007 007
7 days a week, 7am to midnight
Check a list of call charges.

Send the completed form to the National Savings and Investments address. You must include certain documents proving that you can claim the savings. You will find further instructions in the form.

You will then get a ‘valuation letter’ which shows the value of the amount they had at the date of their death.

---

Writing to HM Revenue and Customs

The next step will be to write to HMRC. Let HMRC know which savings and investments you want to use to pay your Inheritance Tax bill (and how much). You must also include:

• An official document showing the value of the investments (e.g. the valuation letter or a recent statement).
• The Inheritance Tax account form IHT400 with your payment reference number on it.
• The probate summary form IHT421 (or confirmation form C1 in Scotland).

Note: You should not send any of the original passbooks or the certificates to HM Revenue and Customs. Allow up to four weeks for HMRC to contact NS&I to request the money transfer.

---

After the Money Transfer

Note: It may happen that the amount transferred does not cover the Inheritance Tax owing. In this case, you will get a letter from HMRC informing you how much to pay and how you can pay it.

---

Using British Government Stock

Computershare Investor Services run the British government stock scheme. You would need to write to them if you want to pay Inheritance Tax and tell them how much of the stock you want to use.

British Government Stocks (Gilts)
Computershare Investor Services plc.
The Pavilions
Bristol BS99 6ZW
Email: [email protected]
Telephone: 0370 703 0143

At the same time, enclose a copy of the death certificate and the stock reference number (if you have it) and send HMRC:

• A letter stating how much tax you want to get paid out of the stock.
• The Inheritance Tax account form IHT400 with your payment reference number on it.
• The probate summary form IHT421 (or confirmation form C1 in Scotland).

Allow up to four weeks for Her Majesty’s Revenue and Customs to contact Computershare to request the money transfer.

Note: Paying Inheritance Tax by this method is not ideal if you will need to get probate quickly.

---

After the Money Transfer

Note: It may happen that the amount transferred does not cover the Inheritance Tax owing. In this case, you will get a letter from HMRC informing you how much to pay and how you can pay it.

---

Transferring National Heritage Property

It only happens in very limited and exceptional cases. But, you can transfer national heritage property to the Crown to pay off Inheritance Tax. As a rule, National heritage properties can include:

• Land or buildings which have architectural, historic, scientific, or scenic interest.
• Artworks, books, and manuscripts or scientific collections with historic, scenic or scientific interest.

HMRC Heritage team deal with this type of payment arrangement. Contact them if you want to make an offer.

HMRC Heritage
HM Revenue and Customs
Ferrers House, PO Box 38
Castle Meadow Road
Nottingham NG2 1BB
Telephone: 03000 562388

---

If HMRC Heritage Team Accept Your Offer

Even if they accept your offer, you would first need to pay off the full amount using another method of payment. You also need to have a ‘probate’ or ‘confirmation’ in Scotland. HMRC would repay the Inheritance Tax you already paid after transferring the property.

---

Paying IHT in Yearly Instalments

Some of the assets in the deceased’s estate could take some time to sell (e.g. property, shares). In some cases, you would be able to pay the taxes in equal annual instalments over a period of 10 years. Inheritance Tax Account form IHT400 gives you the option to select paying in instalments.

As a rule, you would need to pay interest on the instalments. The Inheritance Tax interest calculator can help you work out how much interest you would have to pay.

Note: You would have to pay IHT tax in full once you sell the assets in the estate of the deceased.

---

Due Dates for Paying Inheritance Tax

The initial instalment would be due at the end of the sixth (6th) month after the death. So, the ‘due date’ would be the 30th of June if they died on the 12th of December (for example). The rest of the payments would be due every year on the same date.

---

Making an Early Payment

HMRC allow you to pay off the full tax, and any interest, at any time. Write to the Trusts and Estates department to ask for a final assessment.

---

How the Interest Works

Providing you pay on time, there would be no interest charged on the first instalment. Following that, each instalment would be liable for interest charges on (both):

• The full outstanding tax balance.
• The instalment itself (running from the due date to the date of any late payment).

---

Assets You Can Pay by Instalments

Property

If you choose to keep the house to live in, you would have to pay 10% of the total amount plus the interest on an annual basis.

Shares and Securities

You might be able to pay in instalments using shares or securities. But, the shares or securities must have allowed the deceased person to control more than 50% of a company.

Unlisted Shares and Securities

Unlisted shares or securities are those not traded on a recognised stock exchange. You can use them to pay IHT if the value is more than £20,000 and (either):

• The nominal value (aka face value) represents at least 10% of the total value of shares in the company.
• They represent at least 10% of the total value of ordinary shares held in the company. This must be at the price they were first sold at.

Note: The share certificate shows the face value of a share. It also shows what kind of share it is (e.g. ordinary shares).

You can also pay your Inheritance Tax bill in instalments using unlisted shares and securities if (either):

• At least 20% of the owed amount is on assets that qualify for payment by instalments.
• Paying Inheritance Tax in one lump sum would create financial difficulties.

Business Run for Profit

You cannot use the assets of a business run for profit to pay IHT in instalments. But, you can use the net value of a business.

Agricultural Land and Property

This would be somewhat unusual. In most cases, you would get Agricultural Relief because land and property gets some exemption from Inheritance Tax.

---

Gifts and Paying by Yearly Instalments

As a rule, you would be able to pay the remainder of the bill in instalments if you were gifted:

• Buildings
• Part (or all) of a business
• Shares or securities

Note: Being gifted an unlisted share or security must still have been unlisted at the time the person died.

---

Making Payments on a Trust

1. You would need to get your Inheritance Tax payment reference number at least 3 weeks before making a payment. Apply for an Inheritance Tax reference after a chargeable event (IHT122).
2. You should then send Inheritance Tax Account form IHT100 to HM Revenue and Customs.
3. You can then pay the Inheritance Tax bill using a bank or building society account or by a cheque sent through the post.

---

Payment Deadlines

---

Paying Early to Avoid Interest Charges

There is no problem making early Inheritance Tax payments. You can use the ‘payment on account’ system even before knowing the exact amount that the estate owes.

Failing to pay all the tax that the estate owes by the due date means you will get charged interest. Read through the Inheritance Tax thresholds and interest rates for further details.

---

What Happens if You Overpay?

HMRC will refund any excess amount paid over what the final bill says the estate owes (providing you have probate). Likewise, HM Revenue and Customs also pay interest on any amount that you overpay.

---