When Does Inheritance Tax (IHT) Need to Be Paid?

Note: The following article is part of our Complimentary Articles Series, designed to provide additional insights and detailed information on specific topics within estate planning.

In conjunction with the following article, we recommend you review the following pillar articles to understand inheritance taxes comprehensively.

• What is Inheritance Tax (IHT)?
• How Do I Pay Inheritance Tax to HMRC?
• How Much Inheritance Tax Do I Have to Pay?
• When Does IHT Need to Be Paid?

INTRODUCTION

In estate planning, Executors and Beneficiaries should be aware of the timescales for Inheritance tax (IHT) payments to ensure compliance and avoid potential penalties. This article explains the timelines and highlights other important factors relating to IHT payments for effective estate administration.

IHT PAYMENT TIMELINES

Inheritance Tax is usually payable six months after the end of the month the death occurred.

For instance, if the individual passed away in January, the Estate's IHT must be paid by the end of July.

Remember that HMRC charges interest on any unpaid IHT after the due date, so make sure the submission date is marked in your calendar.

PAYMENT RESPONSIBILITY

Typically, the Estate's Executor or Administrator is in charge of paying IHT, which comes from the Estate's assets.

Where the Estate does not have sufficient funds to cover the IHT bill, it may be necessary to sell some assets or make provisions to pay the tax in regular instalments, especially if the assets are related to property.

WHEN PAYING IN INSTALLMENTS

For certain assets, such as real Estate and some kinds of shares, HMRC permits IHT to be paid in yearly instalments over a ten-year period.

However, since interest is applied to the outstanding amount, you must consider this decision carefully.

CONSIDER THE INFLUENCE OF OTHER FACTORS

Consider how broader IHT-reduction strategies could impact the overall IHT liability and the timing of such payments.

Influencing factors may include gifting property or applying the Residence Nil Rate Band (RNRB). We advise you to consult related tax articles when considering your payments.

Note: Given the intricacies involved in valuing your Estate, filling out the relevant forms and dealing with HMRC, we highly recommend you consult with a specialist tax adviser, especially in the case of a more complex Estate. This will maintain reporting accuracy and transparency and prevent potential legal issues or additional taxes.

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