When is inheritance tax due?

Inheritance Tax (IHT) must be paid before Probate can be granted and before assets are distributed. With the average IHT bill currently £214,000, this can cause an enormous issue for loved ones left behind where there is no immediate access to funds to pay the bill.

It's crucial to understand not only how much tax may be payable but also when it is due.

Timing of Payment

IHT is typically due for payment within six months after the end of the month in which the deceased passed away. For example, if the deceased passed away in May, the IHT would typically be due by the end of November.

Exceptions and Considerations

While the general rule is for IHT to be paid within six months of the death, there are several exceptions and considerations to be aware of:

Payment on Account: In some cases, particularly if the estate includes property or other assets that take time to sell, HMRC may allow the tax to be paid in instalments over 10 years. However, interest is usually charged on any unpaid tax.

Assets with Delayed Payment: If property or certain investments need to be sold, HMRC may agree to delay the payment of IHT. In such cases, the tax would be due within six months after the sale and interest will be charged.

Penalties for Late Payment

Failure to pay IHT on time can result in penalties and interest charges. At what is an already stressful time for families, it should be avoided wherever possible.

Navigating the intricacies of IHT can be daunting, especially during times of grief. The cyclical nature of tax and probate makes this particularly complex where the deceased hasn’t considered how IHT will be paid from the estate.

Seeking professional advice can provide invaluable support in understanding the obligations on your beneficiaries, planning your estate effectively, and ensuring compliance with HMRC regulations.

We’re here to help and having a plan in place gives you peace of mind.

Get in touch to arrange a complimentary estate planning review or to talk through how your family may pay an inheritance tax bill or avoid the bill altogether. Call 0117 3636 212 or email office@haroldstephens.co.uk.