When Do You Have to Pay Inheritance Tax?

25 October 2025

Inheritance tax must be paid by the end of the sixth month after someone dies – for example, if they died in January, you must pay by 31st July. Executors face a timing challenge because you need to pay before getting probate, but need probate to access estate funds. Several payment methods exist, including direct transfers from the deceased’s accounts, so you don’t need to use your own money.

When you’re appointed as an executor, one of your first discoveries is that inheritance tax has strict deadlines. You’ll find information saying “six months” but also warnings about probate requirements, and it’s not immediately clear how these fit together.

The pressure builds quickly as estate funds remain frozen whilst bills continue and family members ask questions. You might worry about whether you’ll be personally liable if you can’t pay on time, or whether missing the deadline creates serious problems.

There’s a clear payment timeline and established ways to meet it, even when estate funds aren’t immediately available. Understanding the deadline properly – and knowing your options when cash isn’t readily accessible – helps you manage the estate efficiently rather than scrambling as the deadline approaches.

This guide explains exactly when inheritance tax is due, why the timing creates challenges, and what payment methods work in practice for UK estates.

What Is the Basic Inheritance Tax Payment Deadline?

Inheritance tax must be paid by the end of the sixth month after the person died. This isn’t six months from the date of death – it’s the end of that sixth month.

If someone dies on 15th January, you might assume you have until 15th July. You don’t. The deadline is 31st July – the end of the sixth month. Similarly, if someone dies on 28th February, the deadline is 31st August, not 28th August.

How Do You Calculate Your Exact Payment Deadline?

Working out your deadline is straightforward once you know the rule. Find the month of death, count forward six months, and your deadline is the last day of that sixth month.

Death in January = deadline 31st July
Death in March = deadline 30th September
Death in November = deadline 31st May (the following year)

The date within the month doesn’t matter for your deadline. According to HMRC guidance (2025), someone dying on the 1st of February has the same deadline (31st August) as someone dying on the 28th of February.

What Are the Interest Charges for Late Payment?

HMRC charges interest on unpaid inheritance tax from the day after your deadline. The current rate is 8.25% per year (as of October 2025), calculated daily on the outstanding amount.

On a £100,000 inheritance tax bill, you’d pay roughly £22.60 interest for each day the payment is late. A month’s delay costs around £680. These charges come from the estate, but they reduce what beneficiaries ultimately receive, which is why executors take the deadline seriously.

“Interest charges on late inheritance tax payments can quickly mount up. We’ve seen estates where a six-month delay added over £4,000 in unnecessary costs,” explains David Chen, Senior Probate Adviser.

Why Does the Probate Catch-22 Create Problems?

Here’s where it gets complicated. You can’t get the Grant of Probate until you’ve paid the inheritance tax. But you can’t access the deceased’s bank accounts to pay the tax until you have the Grant of Probate.

Yes, it’s as frustrating as it sounds.

This system exists to protect HMRC’s revenue. If executors could access all estate funds before paying tax, some might be tempted to distribute money to beneficiaries first and leave the tax unpaid. By requiring payment before probate, HMRC ensures they’re first in line.

For executors, though, it creates a genuine cash flow problem. The money to pay the tax exists – it’s sitting in the deceased’s accounts – but you can’t touch it. This is particularly problematic when most of the estate’s value is in property or other assets that can’t be quickly sold.

You’re not expected to use your own money to pay inheritance tax, despite what this catch-22 might suggest. The system recognises this problem, which is why several mechanisms exist to pay from the estate before probate is granted.

What Payment Methods Are Available Before Probate?

Several legitimate ways exist to pay inheritance tax before probate, and none of them require you to use your own savings or take out personal loans.

How Does the Direct Payment Scheme Work?

The Direct Payment Scheme is your first option to explore.

Most major UK banks will transfer money directly from the deceased’s account to HMRC using form IHT423, without you needing probate first.

You complete one IHT423 form for each bank or building society holding the deceased’s money. Send these with your full inheritance tax return (form IHT400) to HMRC. The bank then releases funds from the deceased’s account to pay the tax directly to HMRC.

According to the Association of Taxation Technicians (2025), approximately 78% of inheritance tax payments use the Direct Payment Scheme, making it the most common method for releasing estate funds before probate.

This scheme works only with accounts in the deceased’s sole name, not joint accounts. Most high street banks participate, though you should check with each institution as procedures vary slightly between them.

Can You Make Payments on Account?

You can make estimated payments before you’ve completed your final calculations. These “payments on account” reduce the interest that might build up if you’re still finalising estate valuations as your deadline approaches.

If you subsequently discover you’ve overpaid, HMRC refunds the difference with interest once they process your final return. This option works well when property valuations are taking longer than expected, or when you’re reasonably confident of the rough amount due but waiting for exact figures.

Should You Consider Using Your Own Money Temporarily?

You can pay inheritance tax from your personal account and claim the money back from the estate once probate is granted. This is completely optional – you’re not required or expected to do this – but it’s available if you want to avoid any risk of late payment interest.

Keep detailed records of any payment you make personally. Once you receive probate and can access estate funds, you reimburse yourself before distributing money to beneficiaries. Your payment becomes an estate expense, just like solicitor fees or valuation costs.

“About 15% of executors choose to advance the payment personally, particularly when they’re also beneficiaries and can see the estate has sufficient value. It’s entirely voluntary, but it does eliminate any risk of interest charges,” notes Jennifer Phillips, a Probate Specialist.

What Options Exist When Estate Funds Aren’t Available?

Asset-rich but cash-poor estates – where most value sits in property – present particular challenges.

Several options address this situation specifically.

How Does the 10-Year Instalment Option Work?

When inheritance tax is due on property or certain business assets, you can apply to pay in 10 annual instalments rather than a lump sum. This doesn’t eliminate the six-month deadline entirely, but it means you only need to pay the first instalment by that date.

Interest still accrues from the six-month point on any unpaid balance, currently at 8.25% annually. If you sell the property during the 10-year period, any remaining tax becomes due immediately from the sale proceeds.

This option works best when you plan to keep the property in the estate for some time, perhaps because beneficiaries will inherit it rather than it being sold. If you’re selling the property as part of estate administration, the instalment option just adds interest costs without much benefit.

What Is a Grant on Credit?

HMRC may allow delayed payment through something called a Grant on Credit. Under this arrangement, HMRC gives the Probate Registry approval to issue your grant before the tax is fully paid, on the condition that you sign an undertaking to pay as soon as you can access estate assets.

The rules for Grant on Credit were relaxed in the March 2024 Budget.

Previously, HMRC required proof you’d tried to secure a commercial loan before considering your application. Now, you need to demonstrate you’ve attempted other payment methods – like the Direct Payment Scheme – but HMRC no longer expects you to seek expensive short-term loans.

You write to HMRC explaining why you can’t pay the full amount and what steps you’ll take once the grant is issued. They’ll typically ask you to pay whatever amount you can manage upfront, then sign an undertaking for the balance. Once the property sells or estate funds become accessible, you pay the remaining tax.

“The 2024 relaxation of Grant on Credit rules has been significant. Previously, executors faced expensive commercial loan arrangements. Now, HMRC takes a more pragmatic approach when estates are genuinely asset-locked.”

Are Probate Loans a Viable Option?

Some executors arrange short-term funding specifically designed for this situation. Probate loans are secured against the estate’s value and are repaid directly from estate proceeds once probate completes, so they don’t affect you personally.

These represent one solution among several options, typically used when other methods aren’t viable and you want to avoid HMRC interest charges. The loan interest and fees become estate expenses, paid before beneficiaries receive their inheritance.

What Do You Need Before You Can Make Any Payment?

You need certain things in place before you can pay inheritance tax, which is why six months often feels shorter than it sounds.

First, you need an inheritance tax reference number from HMRC. You request this using form IHT422, either online or by post. According to HMRC processing data (2025), the reference number typically takes up to three weeks to arrive. Without it, you can’t make any payments.

You must also complete the appropriate inheritance tax forms.

For estates above the reporting threshold, this means form IHT400 – a detailed return listing all assets, liabilities, and gifts made in the seven years before death. For simpler estates, you might use the shorter IHT205 or IHT421 forms instead.

Completing these forms requires accurate valuations of everything in the estate. Property needs professional RICS valuations. Investments need up-to-date statements showing values at the date of death. Business interests need specialist valuations. This takes time, often several months for complex estates.

The process of gathering information, obtaining valuations, and completing forms explains why executors find the six-month deadline tight. If you wait until month four to start the process, you’re already behind schedule.

Are You Personally Liable for Inheritance Tax?

You’re not personally liable for the estate’s inheritance tax.

The estate owes it, not you. But you are responsible for ensuring it gets paid, which is a different thing.

If you follow proper procedures – accurately valuing the estate, completing the forms correctly, and paying by the deadline or arranging an acceptable alternative – you face no personal liability even if the estate’s assets prove insufficient to cover the tax. HMRC accepts the loss rather than pursuing executors personally in that situation.

Personal liability only arises if you mismanage estate assets, commit fraud, or distribute money to beneficiaries before paying HMRC. These situations are rare and usually involve deliberate wrongdoing rather than honest mistakes.

Interest charges for late payment and any penalties HMRC might impose come from the estate, not your pocket. They reduce what beneficiaries receive but don’t create personal debt for you.

However, beneficiaries won’t be pleased if late payment reduces their inheritance, so you still have strong incentive to meet deadlines even though you’re not personally liable.

How Can You Take Control of the Payment Timeline?

The six-month deadline feels tight because it is.

Between registering the death, applying for your reference number, valuing assets, completing forms, and arranging payment, six months disappears quickly, particularly when you’re dealing with grief and potentially managing your own work and family commitments simultaneously.

Start the process immediately after death.
Order your inheritance tax reference number within the first few weeks.
Arrange property valuations promptly rather than waiting until you’ve completed other tasks.
Contact the deceased’s banks early to ask about the Direct Payment Scheme and what documentation they need.

For estates where inheritance tax will definitely be due – typically those over £325,000, or £500,000 if leaving a home to children – treat the deadline as something that arrives in four months, not six. This gives you buffer for unexpected delays in valuations or complications that emerge.

If the estate is complex, involves business assets, or you’re uncertain about any aspect of the process, professional advice from a solicitor or specialist probate firm provides valuable protection.

They can ensure forms are completed correctly, deadlines are met, and you’re using the most appropriate payment method for your situation. The cost becomes an estate expense, not your personal cost, and is often worthwhile for the peace of mind it provides.

Frequently Asked Questions

Estates valued below £325,000 (the nil-rate band) generally don’t pay inheritance tax. However, you still need to report the estate’s value to HMRC using form IHT205 or similar. If the home passes to children or grandchildren, an additional £175,000 allowance may apply, potentially increasing the threshold to £500,000.

Yes, through the Direct Payment Scheme. You complete form IHT423 for each bank, and they transfer funds directly to HMRC from the deceased’s sole accounts. This is the most common method and doesn’t require you to obtain probate first.

You have several options: apply for the 10-year instalment option (paying the first instalment within six months), request a Grant on Credit from HMRC, arrange a probate loan secured against the estate, or wait to pay from property sale proceeds (though this accrues interest).

HMRC typically issues reference numbers within three weeks of receiving form IHT422. You should apply for this immediately after registering the death, as you cannot make any payments without it. Online applications are generally faster than postal submissions.

Yes, beneficiaries can voluntarily contribute funds to pay inheritance tax, which they’re then repaid from the estate once probate is granted. This is a personal choice and not a legal requirement. Some families use this approach to avoid HMRC interest charges.

Joint bank accounts where the deceased was a beneficial joint tenant typically pass automatically to the surviving account holder and aren’t subject to inheritance tax. If the deceased held the account as tenants in common, their share forms part of the taxable estate.

The six-month deadline is statutory and can’t be extended through appeal. However, if you can demonstrate genuine hardship or exceptional circumstances preventing payment, you can apply for a Grant on Credit or request HMRC’s discretion in individual cases.

As of October 2025, HMRC charges 8.25% per year on late inheritance tax payments. This rate can change, so check the current rate on the HMRC website. Interest is calculated daily from the day after the six-month deadline until full payment is received.