This guide is maintained as a current resource for September 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
A comprehensive guide to paying Inheritance Tax during probate in England and Wales, explaining reporting requirements, payment options, deadlines, instalment schemes and responsibilities for personal representatives.
Inheritance Tax (IHT) is a tax on a deceased person's estate that may need to be settled as part of the probate process in England and Wales. Personal representatives (executors or administrators) are responsible for reporting the estate's value to HM Revenue & Customs (HMRC) and paying any tax due before applying for a Grant of Probate or Letters of Administration. Understanding how and when to pay Inheritance Tax, what practical steps are involved, relevant deadlines and available options can help personal representatives manage this obligation effectively.
What Is Inheritance Tax and When Does It Arise?
Inheritance Tax is a tax on the value of a person's estate when they die. It applies if the estate's net value exceeds the applicable Nil Rate Band, which is currently £325,000 for an individual and may be higher with the Residence Nil Rate Band or unused allowances from a deceased spouse or civil partner. IHT is typically charged at 40% on the value above the threshold, subject to reliefs and exemptions.
Where IHT is due, it must be reported and paid in accordance with HMRC requirements as part of estate administration. Executors or administrators must complete the appropriate inheritance tax forms and calculate the estate's value, taking into account assets, liabilities and applicable reliefs.
Reporting the Estate's Value to HMRC
Before any tax can be paid, the personal representative must value the entire estate and submit the information to HMRC. This is usually done using forms such as IHT400 or, in some cases, simplified reporting where no tax is due. The reporting deadline is within 12 months of the date of death, and this must be done before applying for probate.
Accurate valuation is critical because HMRC uses the reported figures to calculate the tax due. Assets such as property, cash, investments, insurance benefits and personal possessions must be valued at their market value at the date of death. Professional valuations may be recommended for high‑value assets.
When Inheritance Tax Must Be Paid
Inheritance Tax is due by the end of the sixth month after the month in which the person died. For example, if someone died in January, the IHT must be paid by the end of July. HMRC may charge interest on unpaid tax if it is not paid by the due date.
It is common practice for personal representatives to pay some or all of the IHT before probate is granted because HMRC generally requires confirmation that tax has been paid before issuing a Grant of Probate or Letters of Administration.
Payments on Account
If the estate is complex or the total tax liability cannot be calculated immediately, personal representatives can make payments on account of the anticipated IHT due. This reduces the interest that may accrue while valuations are being finalised.
How to Pay Inheritance Tax
HMRC accepts Inheritance Tax payments in several ways once a payment reference number has been obtained:
- Bank transfer or from personal accounts: The personal representative may pay HMRC from their own bank account or from a joint account with the deceased.
- Direct Payment Scheme: Many UK banks, building societies and investment providers participate in a scheme that allows funds to be transferred directly from the deceased's accounts to HMRC before probate is granted. Personal representatives must complete form IHT423 and submit it to the relevant institution.
- Cheque by post: A cheque payable to “HM Revenue and Customs only”, with the deceased's name and reference number on the back, can be sent to HMRC. Cheque payments may take longer to process.
- Telephone or in‑branch banking: Some banks allow payment via telephone banking or in person.
Personal representatives should check with HMRC and the estate's financial institutions for any specific requirements for different payment methods.
Options When Estate Funds Are Not Readily Available
Sometimes the estate's cash or liquid assets are not immediately accessible to pay the full IHT liability, particularly where significant value is tied up in property or business assets. In such cases, there are options:
Postponing Payment (“Grant on Credit”)
If IHT cannot be paid from the estate prior to probate, personal representatives can apply to HMRC to postpone payment until after the grant has been issued. This involves sending the completed IHT400 and supporting documents to HMRC with a letter explaining why funds cannot currently be released. HMRC may agree to a grant on credit, allowing the tax to be paid from estate funds when they become available. Interest will continue to accrue on the unpaid amount.
Instalment Payments for Certain Assets
In some circumstances, IHT may be paid in annual instalments over up to 10 years when a significant part of the tax is due on assets such as land, business property or certain shares. To qualify, the tax on these assets must be identified and an option for instalments must be notified to HMRC before the end of the six‑month deadline.
Personal Representative Responsibilities and Liability
Executors and administrators have legal responsibility for ensuring that the IHT return is submitted correctly and the tax is paid on time. Inaccurate reporting or failure to pay IHT can expose personal representatives to personal liability, including interest and penalties if HMRC later determines that tax was underpaid due to misvaluation or omission.
It is advisable to retain copies of all tax forms, valuations and correspondence with HMRC or financial institutions as evidence of compliance with statutory obligations.
Practical Challenges and Timeframes
The sequence of events-valuation, reporting, paying IHT and obtaining probate-can take several months. Delays in probate applications and processing can create a situation where assets remain inaccessible while the IHT payment deadline approaches. Personal representatives are encouraged to begin the valuation and tax reporting steps early to reduce delays and potential interest charges.
Even when no tax is eventually due, HMRC may require reporting of the estate's value before issuing probate, particularly where the value exceeds allowances. It is important to understand whether the estate falls under “excepted estate” criteria or requires full reporting on forms such as IHT400.
Common Questions About Paying Inheritance Tax
Do personal representatives pay IHT from their own funds?
No. Inheritance Tax is a liability of the estate, not the individual executor or administrator. Personal representatives can, however, use their own funds to pay the tax and then reclaim those funds from the estate once assets are available.
What happens if IHT is not paid within six months?
Interest will accrue on any unpaid tax from the end of the sixth month after death. It is therefore important to pay or arrange payment before this deadline.
Can probate be granted before IHT is paid?
HMRC generally requires that IHT is paid (or arrangements made including a grant on credit) before confirming that probate can be granted. Failure to satisfy these requirements can delay estate administration.
Key Takeaways
Paying Inheritance Tax during probate in England and Wales is a structured process that involves valuing the estate, reporting to HMRC, obtaining a payment reference and settling the tax due before probate can be granted. Personal representatives may use the Direct Payment Scheme, make payments from personal or estate accounts, or apply to postpone tax payment when funds are inaccessible. Accurate reporting, timely payment and compliance with statutory deadlines are essential to avoid interest, penalties and personal liability.
